Assuming the Capital Asset Pricing Model (CAPM) holds, calculate the expected returns and the risk premia of the following two portfolios.
1. Portfolio 1 has a beta of 1.5; the return on the market portfolio Rm is expected to be 8% and the riskfree rate Rf is 1%.
2. Portfolio 2: the estimated correlation coefficient between the returns on Portfolio 2 and the market portfolio returns is 0.1, the standard deviation of the market portfolio returns is 3%, and the standard deviation of the returns of Portfolio 2 is 8%; the values of Rm and Rf are as for Portfolio 1.