Smith Co has an expected return of 19% and a beta of 1.25. MBI Co has an expected return of 13% and a beta of 0.75.
A) If the prices of these assets are correct and according to the CAPM what is the risk free rate and what is the market return.
B) if a composite portfolio Smith and MBI has a beta of 1.35. What is the expected return on the portfolio?