QUESTION 3 (25 Marks) You are given the following information on two real estate stocks, Kappa and Omega, the market portfolio, and the risk-free rate: Kappa Omega Market Portfolio Risk-free rate Expected Return % (%) 15.5 8.2 12 5.0 Correlation with Market Portfolio 0.9 0.8 1.0 0.0 Standard Deviation(%) 20 9.6 12.0 0.0 (a) Draw the SML and ensure that you label your drawing completely; (5 marks) (b) What is the equation of the SML? (4 marks) (c) What are the betas for the two securities? (6 marks) (d) What are the alphas for the two securities? (4 marks) (e) Plot the two securities relative to the SML. (6 marks)