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The market portfolio ( M ) provides a 1 5 % annual return with a 2 0 % standard deviation. The risk - free rate
The market portfolio provides a annual return with a standard deviation. The riskfree rate of return is per annum. Security and provide and return per annum and their betas are and respectively. Based on this information Mr Ali drew the following graph of Security Market Line SML to identify any mispricing of security and in the market. Unfortunately, Jenny forgot to label her graph. Help her label the following graph.
i Identify the labels for Axis and Axis
ii Among the points, A B C D E and F on the graph identify the locations of riskfree return and market portfolio M
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