Question: Draw the Security Market Line (SML) and plot Asset C such that it has less risk than the market but plots above the SML, and

Draw the Security Market Line (SML) and plot Asset C such that it has less risk than the market but plots above the SML, and Asset D such that it has more risk than the market and plots below the SML. (Be sure to indicate where the market portfolio and risk-free returns are on your graph and provide the formula and the slope of the SML.) Explain how Assets C or D can plot as they do and explain why such pricing cannot persist in a market that is in equilibrium.

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