Stock ABCStock priceDividend1 Jul 2021$32 30 June 2022$36.5$0.5

1. Assume that you bought the stock ABC on 1 July 2021, and sold it on 30 June 2022. During the period, a dividend of $0.50 was paid. Calculate the actual (realised) return you made on the stock.
2. Assume that the market risk premium is 6% and return on risk free asset is 2.5%. IF stock ABC has a beta of 1.5, what is the required rate of return according to CAPM?
3. Draw the SML line using the answers obtained in 1. and 2. Label X and Y axes and intercept (constant). Clearly present values on X and Y axes and locate the stock ABC in graph.