(Please answer 3-5 with equations and work shown!)

3. You have one million USD and want to create a portfolio equally as risky as the market. Given this information, fill in the rest of the following table: (15 points)

Asset	Investment	Beta
Stock A	$195,000	0.90
Stock B	$340,000	1.15
Stock C	?	1.29
Risk-free asset	?	?

4. Suppose you observe the following situation:

Security	Beta	Expected Return
Pete Corp.	1.15	12.90%
Repete Co.	0.84	10.20%

Assume the two securities are correctly priced. Based on CAPM, what is the expected return on the market? What is the risk-free rate? (15 points)

5. Explain the CAPM. [hint: we need to discuss systematic and unsystematic risks, diversification, assumptions CAPM makes, SML line, the model, things CAPM can't explain, etc. Everything should be linked with the development of the CAPM ] (20 points)