Task: Use the CAPM to answer the following questions:
Q1. Find the Expected Rate of Return on the Market Portfolio given that the Expected Rate of Return on Asset "i" is 12%, the Risk-Free Rate is 4%, and the Beta (b) for Asset "i" is 1.2.
Q2. Find the Risk-Free Rate given that the Expected Rate of Return on Asset "j" is 9%, the Expected Return on the Market Portfolio is 10%, and the Beta (b) for Asset "j" is 0.8.
Q3. What do you think the Beta of your portfolio would be if you owned half of all the stocks traded on the major exchanges? Explain.