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  3. 1. let's assume that capm holds, and the market is

1. Let's assume that CAPM holds, and the market is efficient, this table below shows...

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1. Let's assume that CAPM holds, and the market is efficient, this table below shows the expected return for portfolio A and market portfolio given different states of the economy. The to one decimal point) risk-free rate is 0.02.(Round everything State(s) Recession Normal Expansion Probability ETA) E(M.) 0.4 -0.1 0.1 0.5 0.1 0.2 0.1 0.2 0.5 (1) What is the beta of portfolio A? (2) What is the alpha of portfolio A? (3) How would you explain to your clients about this portfolio's return movement regarding the market based on CAPM model

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