Question: Construct a security market line graph and plot the expected return of each investment on the graph. How do you find the risk free rate,

Construct a security market line graph and plot the expected return of each investment on the graph. Construct a security market line graph and plot the expected return of

How do you find the risk free rate, required return on investment, and required return on market? I found the beta values for each investment by constructing corporate charcteristic lines.

Estimated one-year return distributions: State of the Economy Poor Below average Average Above average Excellent Probability 0.1 0.2 0.4 1-Year Health care T-Bill Fund 7% -8% 7% 2% 7% 14% 25% 33% Inverse ETF 18% 23% 7% -3% 2% Biotech Fund -19% 0% 13% 31% 50% S&P 500 -15% 0% 15% 30% 45% 0.2 7% 0.1 7% Historical return distributions: Year 1 Year 2 Year 3 Year 4 Year 5 1-Year Healthcare T-Bill Fund 7% -8% 7% 2% 7% 14% 25% 33% Inverse ETF 18% 23% 7% -3% 2% Biotech Fund -19% 0% 13% 31% 50% S&P 500 -15% 0% 15% 30% 45% 7% 7%

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