Task 2 a. With the help of diagram(s), illustrate why the portfolio that maximize Sharpe ratio is necessarily the optimal risky portfolio. (5 marks) b. The securities in this question are HSBC (a bank), Swire Pacific (an airlines), MTR (a public utilities), China Mobile (a telecom giant), and China Unicom (another telecom giant). Explain why the optimal risky portfolio constructed with these securities alone is not optimal in reality? (10 marks) c. Under what conditions would capital market line (CAL) derived from Markowitz' procedures NOT be the same as capital market line (CML) in capital asset pricing model (CAPM)? (10 marks) d. In CAPM, what would CML become if investors are allowed NO borrowing? Illustrate your answer with diagram(s). (10 marks) e. In CAPM, how would the shape of CML become if investors can only borrow at a rate higher than the risk-free interest rate? Illustrate your answer with diagram(s). (10 marks) f. In practice, expected return, standard deviation, and of a security are estimated using past data. Discuss the potential limitations of estimating risk and return relying on past data. (10 marks) Task 2 a. With the help of diagram(s), illustrate why the portfolio that maximize Sharpe ratio is necessarily the optimal risky portfolio. (5 marks) b. The securities in this question are HSBC (a bank), Swire Pacific (an airlines), MTR (a public utilities), China Mobile (a telecom giant), and China Unicom (another telecom giant). Explain why the optimal risky portfolio constructed with these securities alone is not optimal in reality? (10 marks) c. Under what conditions would capital market line (CAL) derived from Markowitz' procedures NOT be the same as capital market line (CML) in capital asset pricing model (CAPM)? (10 marks) d. In CAPM, what would CML become if investors are allowed NO borrowing? Illustrate your answer with diagram(s). (10 marks) e. In CAPM, how would the shape of CML become if investors can only borrow at a rate higher than the risk-free interest rate? Illustrate your answer with diagram(s). (10 marks) f. In practice, expected return, standard deviation, and of a security are estimated using past data. Discuss the potential limitations of estimating risk and return relying on past data. (10 marks)