Your investment portfolio consists of $$15,000$ invested in one stock only $$Microsoft$.$

The risk$-$free rate is $5\%.$ Microsoft has an expected return of $12\%$ and volatility of

$40\%$ and the market portfolio has expected return of $10\%$ and volatility of $18\%.$

Under CAPM

a$)$ What alternative investment has the lowest possible volatility while having

the same expected return as Microsoft

b$)$ What investment has the highest possible expected return while having the

same volatility as Microsoft?

c$)$ Discuss briefly two assumptions of the CAPM

d$)$ Discuss briefly if CAPM is a testable model