you currently have 50% of your wealth in a risk-free asset and 50% in the two mutual funds as shown below, which you may assume are efficiently and correctly priced:

Fund	Expected Return on Stock (%)	Beta of Fund	% of Wealth Invested in Fund
A	12.6	0.90	20
B	17.1	1.40	30

Required: (be sure to show your work)

(a) Using the CAPM, and assuming the market is in equilibrium, calculate the risk-free rate and the expected return on the market portfolio.

Notwithstanding your answers in part (a), use r_f = 4% and E(r_M) = 12% for parts (b) through (d).

(b) Calculate the expected return on your portfolio.

(c) Calculate the beta of your portfolio.

(d) You want to invest in only the risk-free asset and the market portfolio. You want an expected rate of return of 10%. How would you allocate your wealth between the risk-free asset and the market portfolio?