A market has one risk free f and two risk assets a and b, Financial Management

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A market has one risk free f and two risk assets a and b

A market has one risk free (F) and two risk assets (A and B) only. The risky assets are in equal supply, that is M=0.5 A + 0.5 B. We also know that risk free rate = 0.10, Variance A = 0.04, Covariance (AB) = 0.01, Variance B = 0.02 & Market Rate, Rm = 0.18

(a) Find a general expression (without substituting values) for Market Variance, Beta (A) & Beta (B)?

(b) According to CAPM, what are the numerical values of Rate of return of Stock A & Rate of return of stock B?

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