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3. (a) What are the main principles of (Markowitz) portfolio theory? How does the risk-free...

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3. (a) What are the main principles of (Markowitz) portfolio theory? How does the risk-free lending and borrowing extend the range of investment possibilities (in relation to the efficient portfolio on the efficient frontier)? (b) Details of the shares held in a portfolio are given below: Securities Beta Expected Return Percentage held Share A 1.1 14% 26% Share B 0.8 10% 18% Share C 1.7 18% 31% Treasury Bill 0 2% 25% 1 Calculate the expected return and beta of this portfolio. How does the risk of this portfolio compare with that of the market portfolio

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