a. An asset has a beta of 1.4. Given a market return of 15% and a risk-free rate of 3%, calculate the required rate of return for this asset.

b. Due to recent geopolitical events, investors have become more risk averse and the market return rises to 18%. What is the required rate of return for the same asset?

c. Use your findings in part a to graph the initial security line (SML), and then use your findings in part b to graph (on the same set of axes) the shift in the SML.