a. An important conclusion of the CAPM is that the relevant measure of an asset's risk is its systematic risk. Outline the significance of this conclusion for a manager making financial decisions. b. Assume that the three shares listed below plot on the Security Market Line (SML). Security E(R) Std Dev (R) Bi 0.07 0.15 ? 0.14 0.20 0.80 ? 0.35 1.2 4 0.07 0.00 ? i. Fill in the missing numbers in the table. ii. Draw the SML and plot the three shares on it, as priced by the Capital Asset Pricing Model (CAPM). 111. If Security 2 actually returns 12%, plot this position on the graph and comment on its value. Should it be bought, sold or are you indifferent? 1234 a. An important conclusion of the CAPM is that the relevant measure of an asset's risk is its systematic risk. Outline the significance of this conclusion for a manager making financial decisions. b. Assume that the three shares listed below plot on the Security Market Line (SML). Security E(R) Std Dev (R) Bi 0.07 0.15 ? 0.14 0.20 0.80 ? 0.35 1.2 4 0.07 0.00 ? i. Fill in the missing numbers in the table. ii. Draw the SML and plot the three shares on it, as priced by the Capital Asset Pricing Model (CAPM). 111. If Security 2 actually returns 12%, plot this position on the graph and comment on its value. Should it be bought, sold or are you indifferent? 1234