The Capital Asset Pricing Model and the security market line

Sam holds a portfolio that invests equally in three stocks, such that wAwA = wBwB = wCwC = 1/3. Each stock is described in the following table:

Stock	Beta	Standard Deviation	Expected Return
A	0.5	23%	7.5%
B	1.0	38%	12.0%
C	2.0	45%	14.0%

An analyst has used market- and firm-specific information to make expected return estimates for each stock. The analysts expected return estimates may or may not equal the stocks required returns.

The risk-free rate (rRFrRF) is 4%, and the market risk premium (RPMRPM) is 5%. Use the following graph of the security market line (SML) to plot each stocks beta and expected return on the graph.