Semester 2, 2018 Question 5 18+2- 10 marks You are given the following information on two stocks and the market portfolio. Variances and Covariances Omega Ltd Market Portfolio Security/Portfolio Delta Ltd Omega Ltd Delta Ltd 0.250 0.060 0.090 Market Portfolio 00300050 0040 a) You have $50,000 available to invest and you form a portfolio by short selling $30,000 worth of Delta Ltd and investing all the available funds in Omega Ltd. Compute the beta of this portfolio. Show all calculations b) If the market portfolio's return suddenly falls by 2 percent what, if anything, will happen to the portfolio's return? Explain