Assume that there exist many risky assets on a capital market. The CAPM holds

and the market portfolio offers a return of rM = 12% and has a standard deviation

of oM = 15%. The risk-free rate equals rf = 4%. The stock of company X has an

expected return of rX = 9% and a standard deviation of oX = 15%.

Determine the security market line and beta stock X

Answer rating: 100% (QA)

Security Market Line SML and Beta of Stock X We can use the Capital Asset Pricing Model CAPM to dete... View the full answer