Please answer this question.

Recall the beta-representation of asset return: R,- = Rf + 3,-(Rm Rf) + 6,. In ex- pectation, this becomes E(R,-) = Rf + ,(E(Rm) Rf) since the residual return 6 (or idiosyncratic bit of the return not explained by CAPM) is mean zero. Let E(Rm) = 0.1, and Rf = 0.05. Also, let the variance of the market return, 0%,, = 0.25. Consider a portfolio of two stocks A and B with betas, 5,4 = 1.5 and [33 = 0.8. Further, let 03A = 0.2 and 038 = 0.16 be the residual variance of the two stock returns i.e. the variance of the 6 bit in the CAPM equation. a) Compute the expected return, portfolio beta (p), and total portfolio variance (05;) for an equally weighted portfolio of A and B. b) Compute the expected return, portfolio beta, and total portfolio variance of an equally weighted portfolio of A and B if it is 50% nanced by borrowing (at the risk-free rate)