Remaining Time: 1 hour, 59 minutes, 08 seconds. WEBCAM RECORDIN Question Completion Status: Moving to another question will save this response. Question 3 of 4 Question 3 15 points You are interested in making Investment in S and B. The risk-free rate of return is 6% and the market risk premium is 9%. The expected return of Sis 10%, the expected return of Bis 20%. The standard deviation of Sis 5% and the standard deviation of B is 10%. The beta of Sis 1 and the beta of B is 1.5. States Probabilities IS B 1 10.4 5% 30% 2 0.3 10% 20% 3 10.2 15% 10% 4 10.1 20% 0% Required: (You should enter at least the two last steps of each of your calculations on the system) 1. Compute the expected return and risk of the minimum portfolio Marks) 2. Explain the Investment Opportunity Set between Sand B? Explain with your own words how to draw this graph? (1 Mark) 3. Compute the expected return and risk of the portfolio generating the highest possible retum (4 Marks) 4. Explain, with your own words, how to find graphically the portfolio of the question 3. (1 Mark) 5. Explain with your own words the concept of the efficient frontier and how to show it graphically (2 Marks) 6. Indicate if S and B are over-priced, under-priced or fairly priced. Justify your answer (2 Marks) Note: No Justification, no grade