10. The Capital Asset Pricing Model and the security market line Keith holds a portfolio that is invested equally in three stocks ( WD=wA=w11/3 ). Each stock is described it the following table: An anatyst has used market- and firm-specific information to make expected return estimates for eoch stock, The analyst's expected return estimates may of may not equal the stocks' required returns. The risk-free rate [fur] is 6%, and the market risk premium [RPM] is 4%. Use the following graph with the security market line (5ML) to plot each stock's beta and expected return. (Note: Click on the points on the graph to see their coordinates.) y Home Ch og: Assigriment- Riskand Rates of Return taloz and Study Took intal Options Alege Success Tips rear success Tips te Feedback A stock is in equilibrium it its required return its expected return. In qeneral, assume that markets and stocks are in oquilbrium (or fairfy valued), but sametimes investors Nywe different opinions about a stock's prospects and may think that a stock is out of equibrium (ether . undervalued or overvalued). Based on the analyst's expected return estimates, stock tNo is stock All is in equititium, and stock DET is