Question 1 Assume there are two stocks, A and B, with 81 = 1.4 and 8p = 0.8. Assume also that the CAPM model applies. 1. If the mean return on the market portfolio is 10% and the risk-free rate of return is 5%, calculate the mean return of the portfolios consisting of: (a) 75% of stock A and 25% of stock B (b) 25% of stock A and 75% of stock B. 2. Calculate the variance of the respective portfolios assuming that the standard de viations of the the two stocks are 0 x = 6,0) = 4 and the two assets are not correlated (P = 0) 3. What are the mean return and variance of the portfolios if an investor puts 40% of her wealth in the portfolio, while the rest is invested at the risk free rate