Assume that the risk free rate, RF, is currently 9% and that the market return, RM, is currently 13%.

A) draw the security market line on a set of "nondiversifiable risk (x-axis)-required return (y-axis)" axes.

B) calculate and label the market risk premium on the axes in part A.

C) given the previous data, calculate the required return on asset A having a beta of .80 and asset B having a beta of 1.30.

D) draw in the betas and required returns from part C for assets A and B on the axes in part A. Label the risk premium associated with each of these assets, and discuss them.