Question: Old MathJax webview B/ Given that the expected return on the market portfolio is 10%, the risk-free rate of return is 6%, the beta of

Old MathJax webview

B/ Given that the expected return on the market portfolio is 10%, the risk-free rate of return is 6%, the beta of stock A is .85, and the beta of stock B is 1.20:25 BA.2. a. Draw the SML.

b. What is the equation for the SML?

c. What are the equilibrium expected returns for stocks A and B? d. Plot the two risky securities on the SML.

B/ Given that the expected return on the market portfolio is 10%, the risk-free rate of return is 6%, the beta of stock A is .85, and the beta of stock B is 1.20: a. Draw the SML.

b. What is the equation for the SML?

c. What are the equilibrium expected returns for stocks A and B? d. Plot the two risky securities on the SML.

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