1.  Use the following information to answer questions. What is the portfolio expected return and the portfolio beta if you invest 30% in Security A, 30% in Security B, and 40% in the risk-free asset?

With regard to Securities A and B only, which of the securities has the smaller total risk?

Which security has the smaller systematic risk?

Security             Return       Standard Deviation       Beta

       A                 15%               8%                      1.2

       B                  12%             14%                      0.9

        Rf            5%