Suppose there are only two risky assets with expected return i 0.1, 12 0.2 and covariances o = 0.04, o = 0.09, 012 0.03. The current risk free rate is 0.05. (a) Find the one fund for this small market. (b) Now suppose that there is a new project with an expected payoff Q = 10 and covari- 25, 0Q,1 = = 0.15. Using the one fund as the market portfolio, what is the price of this project according to CAPM? ances = 0.8, OQ,2 Suppose there are only two risky assets with expected return i 0.1, 12 0.2 and covariances o = 0.04, o = 0.09, 012 0.03. The current risk free rate is 0.05. (a) Find the one fund for this small market. (b) Now suppose that there is a new project with an expected payoff Q = 10 and covari- 25, 0Q,1 = = 0.15. Using the one fund as the market portfolio, what is the price of this project according to CAPM? ances = 0.8, OQ,2