Risk and returns (10 points) Probability 0.2 Return of Stock A %) -10 15 38 Return of Stock B (%) -35 18 0.5 0.3 47 a. Calculate expected return of the portfolio with 40% investment in stock A and 60% investment in stock B. b. Calculate CAPM returns for stock A and B given that risk-free rate is 2 percent and market return is 6 percent. Stock A's beta is 0.9 and stock B's beta is 1.5