Question 4 (1) Given the data below, and assuming that the standard deviation of the market return is 2.8%, use the single index model to calculate the variance of each stock's return and the covariance between the two stocks. [50%] Stock 1 Stock 2 1.2 0.9 0 1.1 0.3 Compute the standard deviation of returns of a portfolio that is 50% invested in stock1 and 50% invested in stock 2. [25%] Write the zero beta CAPM equation. [25%)