Question: QUESTION 22: Given that the expected return on the market portfolio is 10%, the riskfree rate of return is 6%, the beta of stock A

QUESTION 22: Given that the expected return on the market portfolio

QUESTION 22: Given that the expected return on the market portfolio is 10%, the riskfree rate of return is 6%, the beta of stock A is 0.85, and the beta of stock B is 1.20: a. Draw the SML b. What is the equation for the SML? [6%+(4%)] c. What are the equilibrium expected returns for stocks A and B? [9.4%], [10.8%] d. Plot the two risky securities on the SML

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