Question 2 The expected rate of return on stock XYZ is 14%, while the expected re- turn of the market portfolio is 11%. The risk-free rate is 5%. The volatility of XYZ is 20%, and the volatility of the market portfolio is 10%. a. What are the MP measures for XYZ and the market portfolio? b. Suppose the alpha for stock XYZ is 5%. What is the Treynor measure for stock XYZ? Question 3 A butterfly spread is the purchase of one call at exercise price X1, the sale of two calls at exercise price X2, and the purchase of one call at exercise price X3. X1 is less than X2, and X2 is less than X3 by equal amounts, and all calls have the same expiration date. Suppose X1 = 80, X, = 100, and X, = 120. What is the payoff of this butterfly spread if St = 95? What is the payoff if St = 115