Consider a market with only the following three risky assets: Expected Return % per month Risk % Covariance with market Asset 1 2.03 2 1.12 Asset 2 1.79 1 0.90 Asset 3 1.49 1 0.62 Market Portfolio 0.92 a) Consider the market po

Consider a market with only the following three risky assets:

Expected Return % per month	Risk %	Covariance with market Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
Asset 1	2.03	1.12
Asset 2	1.79	0.90
Asset 3	1.49	0.62
Market Portfolio	0.92

a) Consider the market portfolio comprised of 4% invested in Asset 1, 76% invested in Asset 2, and 20% invested in Asset 3. What is the expected return of this portfolio? b) What are the betas of the three risky assets? c) Suppose the riskless rate of interest is 0.8% (8/10ths of one percent per month). Are these three securities priced correctly? d) What is the beta of the market portfolio calculated as a weighted average of the betas of its components?

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“ Consider a market with only the following three risky assets: Expected Return % per month Risk % Covariance with market Asset 1 2.03 2 1.12 Asset 2 1.79 1 0.90 Asset 3 1.49 1 0.62 Market Portfolio 0.92 a) Consider the market po ”

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