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Please typed answer!!!!! thank you and will thumbs up right away 3. Assume the risk-free rate is 4% (rf = 4%), the expected return on

Please typed answer!!!!! thank you and will thumbs up right away

3. Assume the risk-free rate is 4% (rf = 4%), the expected return on the market portfolio is 12% (E[rM] = 12%) and the standard deviation of the return on the market portfolio is 16% (?M = 16%). (All numbers are annual.) Assume the CAPM holds.

F. Can securities or portfolios with the following characteristics exist in equilibrium, assuming the CAPM holds (yes or no): (i) expected return 0%, standard deviation 40%, (ii) expected return 9%, standard deviation 9%, (iii) expected return 34%, standard deviation 70%.

G. A stock with a beta of 1 (? = 1.0) has a current price of $40/share. Assuming it pays no dividends, what is the expected price in 1 year? If it is expected to pay a dividend of $4/share at the end of the year, what is the expected price in 1 year (after the payment of the dividend)? If the beta of the stock is 2 (? = 2.0), what are the expected prices under these 2 scenarios, i.e., no dividends or a dividend of $4?

H. For a moment (but just a moment) assume that the CAPM may not hold. In other words, alpha (?) is non-zero. If a non-dividend paying stock with a beta of 1 (? = 1.0) has a current price of $50/share and an expected price in 1 year of $60/share (based on your personal analysis of the companies prospects), what is the alpha (?) of this stock? What if the beta is 2 (? = 2.0)? What if the beta is 3 (? = 3.0)?

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