Question 2 - Assume that you acquire a portfolio containing stocks X, Y, and Z. Stock X weighs 0.5 while Stocks Y and Z are equally weighted. What is the market risk of the portfolio? [2 marks] *

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The risk free rate is 5% and you expect S&P 500 return to be 9%. Stocks X, Y, and Z has a systematic risk value of 1.50, 0.50. and 2.00 respectively. You also have the following information about the three stocks: Dates Rates of return (%) Stock X Stock Y 1st November 2020 21 20 2nd November 2020 22 19 3rd November 2020 23 18 Stock Z 19 18 17