3. The expected return on the market portfolio is 5 percent and the risk-free rate is 1 percenm Stock P has a beta of 1.2. (2 points) What is the required return on Stock P according to the capital asset pricing model (CAPM)? a. Show your calculations here. b. (Fill in the blanks, 3 points) If the expected return on Stock P is 6.2 percent, this stock iseon undervalued, overvalued, fairly priced) according to the CAPM and the alpha of this stock is Show your calculations here. (3 points) Justify your answers by drawing the security market line in the space below. Make sure you mark the locations of Stock P, the risk-free asset, and th market portfolio and label the x-axis and y-axis clearly in the chart. c