CAPM Required Return Security Market Line PM Market Risk Premium 0 1 Beta Risk 2. The security market line (CAPM model) in the above diagram shows how the beta of a security maps into its required return. The risk-free rate and required market return are denoted ry and a respectively 2a. Qualitatively explain why the security market line is upward sloping (1 point) 26. Qualitatively explain one major implication of a straight (as opposed to non-linear or curved) security market line. (2 points) 2c. In theory, is the CAPM model about the "now and the future" or the past? Circle one. (1 noint)