The following portfolios are being considered for investment. During the period under consideration, risk-free rate (RFR) = 7%. Portfolio Return Beta Standard Deviation P 0.15 1.0 0.05 Q 0.20 1.5 0.10 0.10 0.6 0.03 S 0.17 1.1 0.06 Market 0.13 1.0 0.04 Required: a. Compute the Sharpe measure for each portfolio and the market portfolio. (2.5 marks) b. Compute the Treynor measure for each portfolio and the market portfolio. (2.5 marks) c. Rank the portfolios using each measure, explaining the cause for any differences you find in the rankings. (4 marks) Question 1 (Total 10 marks) The Capital Market Line (CML) expresses the risk-return trade-off for a portfolio as follows: E(Rport) = = RFR + Oport [E(RM) - RFR OM Required: a. Extend this expression to allow for the evaluation of any individual risky Asset i. Explain the steps in details. (6 marks) b. What are the similarities and differences between the Capital Market Line and Security Market Line as models of the risk-return trade-off? (4 marks)