QUESTION 3 a) Given is the market information for stock ABC and stock DEF: Beta 1.15 85 Stock Expected return 17% 9 % Currently the Treasury bill rate is 3.5% and the expected returns on the market is 14% o Calculate the required rate of return for both stocks by using the Capital Asset Model (CAPM) (4 marks) ii) Plotting the Security Market Line (SML) using the above calculate figure. (2 marks) ill) Assume that as a result of recent events, investors have become more using the market i set of axes that you use before (in question ( of this changes on the required rate of return is averse, ca on the same return to rise by 1% point to 15% Draw the new SML ) and show what the (4 marks) Risk is a major concern of almost all investors. When shareholder invest their money in a firm, they expect managers to take risks with those funds. In your opinion, is there ethical 5 marks) limits that managers should observed when taking risks with other people's money