Problem 2 ( 5 points ) : The following tables show variance , covariance and correlations for Tesla GM and the S&P 500 index using monthly returns for the past five yea Variance- covariance table S& P 500 ISLA GM S&P 500 10009 ISLA 0.0011 0 0278 GM 0 0013 0 0027 09055 Correlation coefficients S&P 500 ISLA GM S&P 500 ISIA 1 2316 GM 0.575 0 , 218 ( 1 ) ( 2 points ) Calculate the CAPM betas of Tesla GM and a risky portfolio with weights of 60 Tesla and 096 GM ( 2 ) ( 3 points ) Build the SMI for the market using the current average returns for 30 day I- bills ( 0 1% FAR ) and the S&P 500 index ( 8 89 6 FAR ) Identify the betas of Tesla , GM and the risky portfolio in the SML Measure the CAPM alphas of each asset using the current average returns for Tesla ( 26 79% FAR ) , GM 4 . 399 ) , and the risky portfolio ( 10 19 ) Determine whether each asset is over or undervalued according the CAPA