Question #2: CAPM [16 Points) Use the following scenario to answer Part (a) Assume that an investment with a beta of 1.0 generates an expected return of 8.2%, and that another investment, which has a beta of O, generates a return of 1.22%. (a) Draw the Security Market Line (SML). In your graph, be sure to label your axes. Label the asset with the beta of 0 as Point "A" on your SML. Label the asset with the beta of 1 as Point "B" on your SML. [3 Points) Use the following scenario to answer Part (b) Justin has $220,000 invested in a portfolio consisting of Apple Inc (AAPL) and Microsoft (MSFT). Suppose Justin has invested $92,400 in AAPL and $127,600 in MSFT. The betas for the individual stocks are shown in the table below. Stock Beta (B) AAPL 1.4 MSFT 0.88 (b) Refer to the above scenario. What is the beta for the overall portfolio consisting of the two stocks? Round your answer to 3 decimal places. [4 Points) Use the following scenario to answer Parts (e) - (d) Suppose that the current price for a share of Chipotle (CMG) stock is at $1366.80. The stock is expected to pay $21.38 in dividends next year and you anticipate that you will be able to sell the stock for $1492.60 next year. Assume that E(TM) = 0.092, the risk-free rate (r) = 0.02 and Chipotle has a beta (B) = 1.3 (c) Refer to the above scenario. Calculate the one year holding period return (HPR) for CMG stock. [3 Points) (d) Is Chipotle stock overpriced or underpriced at its current price. You must justify your answer. [6 Points)