You own a portfolio consisting of the following stocks:

Percentage Expected Stock of Portfolio Beta Return

1 5% 1.20 14%

2 25 0.65 10

3 15 1.00 12

4 20 1.4 16

5 35 0.90 11

The risk-free rate is 3 percent. Also, the expected return on the market portfolio is 13.8 percent.

From plotting the SML for these data, which stocks appear to be your winners and which ones appear to be losers?

Group of answer choices

Stocks#3 and #4 are the winners

Only stock #4 is the winner

All stocks are losers

All stocks are winners