Security Market Line. Assume that the risk-free rate, R_F, is currently 4% and that the market return, r_m, is currently 10%.

a.Draw the security market line (SML) on a set of "nondiversifiable risk (x-axis)required return (y-axis)" axes.

b.Calculate and label the market risk premium on the axes in part a.

c.Given the previous data, calculate the required return on asset A having a beta of .8 and asset B having a beta of 1.2.

d.Draw the betas and required returns from part c for assets A and B on the axes in part a. Label the risk premiums associated with each of these assets and discuss them.

Please show work.