(Security market line) a. Determine the expected return and beta for the portfolio in the popup window b. Given the foregoing information, draw the security market line and show where the securities and portfolio fit on the graph Assum that the risk-free rate is 3 percent and that the expected return on the market portfolio is 8 percent. How would you interpret these findings? a. What is the expected return of the portfolio? % (Round to two decimal places) What is the beta of the portfolio? (Round to two decimal places) b. The security market line has a positive slope, the y intercept of the security market line is equal to the risk-free rate and the slope of the security market line is equal to the difference between the required return for the market and the risk-free rate since the risk-free rate is 3 percent and the expected return on the market portfolio is 8 percent, the security market line should look like the red line in the following graph Q Security Market Line 20- 3 Portfolio To Expected return) 10 Market 5 Risk-free rate Beta From your plot above, which stocks appear to be your winners and which ones appear to be losers? Enter your answer in each of the answer boxes do Dela for the portfolio in the popup Window 2 Given the foregoing information, draw the security market line and show where the securities and portfolio fit on the grap at the risk-free rate is 3 percent and that the expected retum on the market portfolio is 8 percent. How would you interpret ndings? The security market line has a positive slope, they intercept of the security market line is equal to the risk-free rate, and th lope of the security market line is equal to the difference between the required return for the market and the risk-free rate. Si he risk-free Data Table che red line bild look 20- Expected return (%) PERCENTAGE OF STOCK PORTFOLIO BETA EXPECTED RETURN 1 20% 100 139 2 355 0.80 11% 3 15% 125 17% (Click on the icon located on the top-right comer of the data Table above in order to co its contents into a spreadsheet Risk Print Done From your plot above, which stocks appear to be your winners and which ones appear to be losers? (Select from the drop down menu) Stock 1 is a Stock 215 a thom te drop down menu Toser Stock 3 is a winner from the drop-down menu) Enter your answer in each of the answer boxes PE