Question 4 (10 points) You have estimated Rm, return of market, to be 30 in the next year, and risk free asset yield is 15. SDM is estimated as 10. Please assume SDp of zero, then of 2, the of 4, then of 5, and then of 10; and calculate risk adjusted required rate of return for each level of total risk (SDp), please show your calculations by inserting data in CML equation. Then on a graph paper draw horizontal axis showing SDp and vertical axis showing return. Then place 5 dots for each combination of SDp and the commensurate return. Then link those dots, and extend the line to infinity (end of the paper) Required: 1. Please tell this straight line called CML represents which theory? Give the name of the Theory 2. Please calculate slope of this straight line, such as 4 or 10 3. Please tell how much is the intercept of this straight line with the y-axis, such as 11 or-4 What is the market price of risk in the country, such as 7 or 15, please show calculation 5. What is the price of time in the country, such as 7 or 9 6. What is the risk premium of portfolio Lif its SD is 3, please show calculations 4. Question 4 (10 points) You have estimated Rm, return of market, to be 30 in the next year, and risk free asset yield is 15. SDM is estimated as 10. Please assume SDp of zero, then of 2, the of 4, then of 5, and then of 10; and calculate risk adjusted required rate of return for each level of total risk (SDp), please show your calculations by inserting data in CML equation. Then on a graph paper draw horizontal axis showing SDp and vertical axis showing return. Then place 5 dots for each combination of SDp and the commensurate return. Then link those dots, and extend the line to infinity (end of the paper) Required: 1. Please tell this straight line called CML represents which theory? Give the name of the Theory 2. Please calculate slope of this straight line, such as 4 or 10 3. Please tell how much is the intercept of this straight line with the y-axis, such as 11 or-4 What is the market price of risk in the country, such as 7 or 15, please show calculation 5. What is the price of time in the country, such as 7 or 9 6. What is the risk premium of portfolio Lif its SD is 3, please show calculations 4