Your investment portfolio consists of $13,000 invested in only one stockAmazon.

Supposetherisk-freerateis6%,Amazonstockhasanexpectedreturnof11%anda

volatility of 39%, and the market portfolio has an expected return of 10% and a volatility of

16%. Under the CAPM assumptions,

a.What alternative investment has the lowest possible volatility while having the same

expected return as Amazon? What is the volatility of this investment?

b.Whatinvestmenthasthehighestpossibleexpectedreturnwhilehavingthesame

volatility as Amazon? What is the expected return of this investment?