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Draw the SML and label the X-axis and Y-axis. Label the points where the risk-free rate and market portfolio (M) are located on the graph.
- Draw the SML and label the X-axis and Y-axis. Label the points where the risk-free rate and market portfolio (M) are located on the graph. Plot a point for Security A showing that it has less risk than the market and is underpriced. Plot a point for Security B such that the beta of B is equal to 0.5.
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