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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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