Question $7$

Assume that A and B are two portfolios that lie on the SML with

Assume that ${}_M=10\%.$

i$.$ Derive the SML

ii$.$ Suppose there is a portfolio $C$ with ${}_c=2$ and ${}_c=14\%.$ What can we conclude? Why

is this information useful?

iii. Determine the quantify of systematic risk in $A,B$ and $M$ respectively.

iv$.$ Determine whether A and $B$ are efficient portfolios.