Your investment portfolio consists of $20,000 invested in only one stock-Microsoft. Suppose therisk-free rate is 5 %, Microsoft stock has an expected return of 10 % and a volatility of 40 %, and the market portfolio has an expected return of 8 % and a volatility of 17 %.Under the CAPMassumptions,

a. What alternative investment has the lowest possible volatility while having the same expected return asMicrosoft? What is the volatility of thisinvestment?

b. What investment has the highest possible expected return while having the same volatility asMicrosoft? What is the expected return of thisinvestment?

Hint: Make sure to round all intermediate calculations to at least five decimal places.