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Suppose you observe the following situation: Security T1 T2 Beta 2.32 0.71 Expected Return 23.7 13.1 Requirement-B = 8.43% Requirement-C = T1 = 35.426% T2

Suppose you observe the following situation:

Security T1 T2
Beta 2.32 0.71
Expected Return 23.7 13.1

Requirement-B = 8.43%

Requirement-C = T1 = 35.426% T2 = = 3.316%

Draw the Security Market Line (SML) with clear labels, and plot these two securities on the graph along with the market and risk-free rate (using the findings of Requirements B and C).

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