Question 4: (12.5 points) Dr. Nino Mickey Mouse is a Financial Analyst for the Omega in Oakland, California. He currently employs a theoretical Mean Variance framework and the Table below, in order to estimate the following relationships: Years RNBAD RUNB RMarket 2016 33% 19% 22% 0.25 2017 19% 22% 25% 0.35 2018 12% 21% 24% 0.15 2019 14% 19% 29% 0.10 2020 21% 18% 22% 0.15

Assume that the Risk Free Rate is 3%. a. The Expected Returns for NBAD, UNB and the Market respectively. b. The Variance for NBAD, UNB and the Market respectively. c. The Risk for NBAD, UNB and the Market respectively. d. Draw the necessary Normal Distribution diagrams for the VAR Analysis and carefully explain your answers. e. The Covariances COV (NBAD, Market) and COV (UNB, Market). f. The Betas of NBAD and UNB. Are they Aggressive or Defensive? g. Carefully draw the SML and CML lines and carefully explain your answers. h. What are the Treynor and Sharpe Indices respectively? i. What is the economic implication, if the betas of the two stocks are zero? j. Derive the CAPM Equilibrium relationship for NBAD and UNB respectively.