Consider two assets: The market portfolio (M) and Stock A. - The expected rate of return and standard deviation of the market portfolio is 8% and 15%, respectively. - The risk-free rate is 2%. - The standard deviation of the market portfolios return is 15%. - Stock A has a beta of 1 and a standard deviation of 30%. Currently all your clients funds are invested in stock A. Assume that the CAPM holds (=> expected return = required return).

(Ques.) Draw the capital market line and show the position of stock A and, draw the security market line and show the position of stock A.