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You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset. Security Expected Return Std. Deviation
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset.
Security | Expected Return | Std. Deviation | Correlation with the Market | Beta |
Firm A | .10 | .31 | .55 | .85 |
Firm B | .14 | .56 | .50 | 1.40 |
Firm C | .16 | .65 | .35 | 1.14 |
The Market Portfolio | .12 | .20 | 1 | 1 |
The Risk- Free Asset | .05 | 0 | 0 | 0 |
Required: Draw the Security Market line (SML) and plot all the securities listed above.
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