What are the risks and rewards of p and m

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Reference no: EM131235323

The following represents the probability distribution for the rates of return for next month:

Probability	Pfio P	Market M
1/6	-20%	-5%
2/6	-5%	+5%
2/6	+10%	0%
1/6	+50%	+10%

Compute by hand (and show your work) for all the following questions.

(a) What are the risks and rewards of P and M?

(b) What is the correlation of M and P?

(d) If you were to hold 1/3 of your portfolio in the risk-free asset, and 2/3 in portfolio P, what would its market beta be?

Reference no: EM131235323

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