You are considering an investment in a portfolio P with the following expected returns in three different states of nature:

	Recession	Steady	Expansion
Probability	0.20	0.65	0.15
Return on P	-20%	18%	32%

The risk-free rate is currently 5%, and the market portfolio M has an expected return of 15% and standard deviation of 25%, and its correlation with P is .5.

1. Is P an efficient portfolio relative to the market?
2. What is the portfolio Ps beta?
3. Does portfolio P have a positive or negative alpha relative to its required return given its level of risk? Would you characterize P as a buy or sell, and why?