State Probability R_A R_M

1 10% 16% 10%

2 40% 7% 18%

3 40% 12% -5%

4 10% -8% 9%

1. i) What is the probability that the actualized return on security A will be equal or less than 3% in the coming investment period?

ii) What is the probability of actually losing 4% or more on the market portfolio in the coming investment period?

2. Calculate the covariance between A and M.

3. Calculate the beta of security A (4 decimal places). What is the beta of the market?