You have a portfolio with 60% allocation of funds to the market portfolio and remaining amount is allocated to a riskfree asset. The beta of your portfolio is _____ .
a. 
0 

b. 
0.6 

c. 
1 

d. 
1.5 
Which of the following statements is false?
a. 
SML is the graphical representation of expected returnbeta relationship of the CAPM. 

b. 
Slope of SML is the market risk premium. 

c. 
Alpha is the abnormal rate of return on a security in excess of that predicted CAPM. 

d. 
Underpriced assets plots below the SML. 
Dear student, only one question is allowed at a time. I am answering the first question
Beta of the market portfolio is 1
Beta of the risk free asset is 0 as there is no risk involved
So, weighted average beta
= Weight of market x Beta of market + Weight of risk free asset x Beta of the risk free asset
= 0.60 x 1 + (1 – 0.60) x 0
= 0.60
(Total weight = 1, So, weight of remaining investment = 1 – 0.60 = 0.40)
So, as per above calculations, option b is the correct option
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