Lets assume that the CAPM holds. Under the current market conditions, the expected rate of return on an asset is 18% and its beta is 1.25. The annual risk-free interest rate is 8% and the expected rate of return on the market portfolio is 15%. a. Represent graphically the SML (Security Market Line) and explain whether this asset is undervalued, overvalued or correctly valued. b. What should happen to this asset under the CAPM? Show what this means graphically.