Question: Question 2 a. Complete the following: i. Define the Security Market Line (SML) (4 marks) ii. What is the shape off the SML? (2 marks)

Question 2 a. Complete the following: i. Define the Security Market Line (SML) (4 marks) ii. What is the shape off the SML? (2 marks) iii. Explain what the movement along the SML represents. (2 marks) iv. Explain what the shift in the SML represents. (2 marks) 4 b. If you hold a portfolio made up of the following stocks: Investment Value Beta Stock A $6,000 1.8 Stock B $10,000 1.4 Stock C $4,000 0.6 What is the beta of the portfolio? (Hint: it requires you to find the weighted average of the betas) (5 marks)

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