Deduce the equation of the Capital Market Line for this stock market.

Extend table 2 above to include a column of CML-implied expected return

for each of the shares. Plot the graph of CML-implied expected return

against total risk (standard deviation) and draw the Capital Market Line for

this market. Further, plot the CAPM-implied expected return against total

risk on the same graph. Comment on your plots.

Table 2 shows the information on FTSE250, and the shares listed on the London Stock Exchange: Table 2 This stock market is in equilibrium according to the Capital Asset Pricing Model (CAPM). The 90 -day UK Treasury gilt rate of interest is 7%