Q.8. Shares in A and B lie on the security market line. Share A Share B Expected return 15.6% 25.2% Beta 0.8 (assume the CAPM holds) (a) What is the riskless rate of return and the risk premium on the market index portfolio? ( 3 marks) (b) Share P has an expected return of 23 per cent and a beta of 1.5. What is likely to happen to the price and return on shares in P? (1 mark) (e) Share Q has an expected return of 15 per cent and a beta of 0.7. What is likely to happen to the price and returns on a share in Q? (1 mark)