Question: Explain, with the aids of a graph, the term efficient portfolios and how to achieve them. (5 marks) Critically explain the term market portfolio. (5

  1. Explain, with the aids of a graph, the term efficient portfolios and how to achieve them. (5 marks)
  2. Critically explain the term market portfolio. (5 marks)
  3. Critically explain, including the use of a graph, the security market line (SML). (5 marks)
  4. If there is a stock which is substantially overvalued, where it should plot relatively to the SML? Critically explain what should happen to that stock in equilibrium if a competitive market. (5 marks)

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