The risk-free rate Chup] is 6%, and the market risk premium (RPst] is 4%. Use the following graph with the security market line (SML) to plot each stock's beth and expected return. (Note: Click on the points on the graph to see their coordinates.) 20 10 10 Stock DET A Stock AL RATE OF RETURN(Percent) Stock INO 4 . 02 0 0 14 0.0 0 2 RISK (Beta) A stock is in equilibrium if its required return its expected return. In general, assume that markets and stocks are in equilibrium for falry valued), but sometimes investors have different options about a stock's prospects and may think that a stock is out of equilibrium (either undervalued or overvalued). Based on the analyst's expected return estimates, stock INO stock All is in equilibrium, and stock DET 10. The Capital Asset Pricing Model and the security market line Kelth holds a portfolio that is invested equally in three stocks (WDWA-W - 1/3). Each stock is described in the following table: Beta Stock DET 0.7 Standard deviation Expected Return 25% 8.0% 38% 10.0% 13.5% 1.0 AIL INO 1.6 An analyst has used market and firm-specific information to make expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns The risk-free rate is 6%, and the market risk premium (RPM) is 4%. Use the following graph with the security market line (SML) to plot each stock's beta and expected return. (Note: Click on the points on the graph to see their coordinates.)