3. The risk-free rate is 4%. The expected return for a stock with a beta of 0.75 is 10%. Assuming that CAPM is valid, what is the expected return of the market portfolio? A) 12% B) 10% C) 8% D) 6% 4. Draw the security market line (SML) on the XY-coordinate plane. The horizontal axis ( X-axis) and the vertical axis ( Y-axis) indicate the asset's beta and the expected return, respectively. At what point is the Y-intercept (= the intersection with Y-axis)? A) 0 B) 1 C) Market risk premium D) Risk-free return