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asap please (Security market line) the risk-free rate of return is 7 percent and the expected rate of return on the market portfolio is 16
asap please
(Security market line) the risk-free rate of return is 7 percent and the expected rate of return on the market portfolio is 16 percent a. Graph the security market line (SML). Also, calculate and label the market risk promium on the graph b. Using your graph from question a, identity the expected rates of return on a portfolio with a bota of 60 and a beta of 170, respectively c. Now assume that because of a financial crisis the economy slows down and anticipated inflation drops. As a result, the risk free rate of return drops to 15 percent and the expected rate of return on the market portfolio drops to 10 5 percent. Draw the resulting security market line d. Now assume that because of economic foars, investors have become more skivors, demanding higher return on all sets that have any risk. This results in an increase in the expected rate of return on the market portfolio to 175 percent (with the risk droo rato equal to 7 percenty Draw the resulting SML What can you conclude about the effect of a financial crisis on expected rates of return Step by Step Solution
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