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Use the graph below to answer the following two questions Security Market Line (SML) 20% 16% 12% 8% Required Return 4% Risk-Free Rate 096 0.0

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Use the graph below to answer the following two questions Security Market Line (SML) 20% 16% 12% 8% Required Return 4% Risk-Free Rate 096 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Relative Risk as Measured by Beta 19) A stock plotted in this graphical space that lies ABOVE the solid line would be considered: a. Overpriced b. Underpriced c. Accurately Priced d. Not enough information to answer this questiorn 20) The slope of the solid line is also known as a. Risk Free Rate b. Beta c. Treynor Index d. Fama Ratio e. Sharpe Ratio

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