Question: Draw the security market line when the Treasury bill rate is 4% and the market risk premium is 7%. What are the project costs of

Draw the security market line when the Treasury bill rate is 4% and the market risk premium is 7%. What are the project costs of capital for new ventures with betas of .75 and 1.75? Which of the following capital investments have positive NPVs?

Project	Beta	Internal Rate of Return, %
P	1.00	14.00%
Q	0.00	6.00%
R	2.00	18.00%
S	0.40	7.00%
T	1.60	20.00%

Risk-free rate		4.00%
Market risk premium		7.00%
Beta (a)		0.75
Beta (b)		1.75

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