Primarily question 5) (d)

5. Assume the risk free rate equals Rf = 3%, and the return on the market portfolio has expectation E [RM] = 10% and standard deviation 0M = 16%. Assume the CAPM assumptions hold. (a) What is the equilibrium market risk premium? (b) Consider two assets with realized returns of 14% and 21% in a given year. What can we say about the relative betas of these stocks? (0) Consider two assets with expected returns of 14% and 21% in a given year. What can we say about the relative betas of these stocks? (d) Consider two assets with return volatility of 40%. One asset has a beta of 2, the other a beta of 1. Which asset has more idiosyncratic risk? Which asset has a higher alpha