Standard deviation Expected Return

Bonds $45,000 15% 6.50%

Stocks $55,000 12% 14%
$100,000

Portfolio Standard deviation 13.35%

(Weighted averge of individual SD)

Portfolio Expected Return 10.63%

(Weighted averge of individual ER)
Risk Free Return (RF) 5%
Market Return (RM) 10%
Stock Y's Expected Return (RY) 12%

By CAPM Formula
RY = RF + (RM- RF)*(Beta Coefficient)

Beta Coeffient((RY-RF)/(RM-RF)) 1.4

Risk Free Return (RF) 5%
Market Return (RM) 10%
Beta Coeffient 2.0

By CAPM Formula
RY(Required return)= RF + (RM- RF)*(Beta Coefficient) 15%
Risk Free Return (RF) 4%
Market Return (RM) 12%
Beta Coeffient 1.25
Actual Return 12.5%

By CAPM Formula
RY(Required return)= RF + (RM- RF)*(Beta Coefficient) 14%

Alpha Value -1.50

(Actual Return - CAPM Return)