Consider a portfolio of risky assets from which cash flows at the end of the year may be US $70,000 or US $200,000, with equal probability of 0.5; Alternative risk-free Treasury bills pay an annual interest rate of 6%.

(1). If the investor demands an 8% risk premium, how much is the investor willing to pay to buy the portfolio?

（2）.Given that the investor can purchase the amount of the portfolio in (a), what is the expected return on that investment?

(3). Assuming investors now demand a 12% risk premium, what price would investors be willing to pay?

(4). Compare the answers to (a) and (c). What is the investor's conclusion about the relationship between the risk premium required to invest and the selling price?