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Amy Tan is thinking of buying a new stock HRP to put into her portfolio. The probabilities of getting each of the possible returns for

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Amy Tan is thinking of buying a new stock HRP to put into her portfolio. The probabilities of getting each of the possible returns for an average market stock k_m are given below. a. What is the average expected market stock's rate of return k_m? b. What is the security market line (SML) for the Stock P's rate of return k_p with a beta of 1.75, given the risk-free rate is 7%? c. If the new stock F has a beta of 2.5, what is the required rate of return k_F on this new stock? d. If Amy expected a rate of return on the new stock F to be 16%, should this new stock F be purchased? What is the expected rate of return that will make Amy indifferent to purchasing this stock

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