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# A panicular economy contains only two risky assets. it and Y. plus a risk-free asset. Asset prices in this economy satisfy the CAPM. Data on the two...

Just wanting to solve 2ii. I've solved 2i and know how to do the rest, to save you the time 2i is:

X is 1/3, Y is 2/3, E(Rm)=0.17, std dev of mkt=0.09

2)a. A panicular economy contains only two risky assets. it and Y. plus a risk-free asset. Asset prices inthis economy satisfy the CAPM. Data on the two assets are given below. The correlation betweenreturns on the two assets is exactly one third. Shares Price El: R 1 Return volatility 5D 2|]L 0.21 13.15SD 25 (115 CLUB i. Compute the market portfolio weights. the expected return on the market and the standard deviation of the market return. {5 marks}ii. Compute the bets on teeth assets. Comment on their absolute and relative magnitudes. {5 marks} iii. Calculate the risk-free rate in this economy. (2 marks} iv. Compute Sharpe ratios for x and ‘r' and for the market portfolio. Comment on their relativemagnitudes and. in particular. on the size of the market sharpe ratio relative to those on Xand Y. {3 marks}