You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks:

Stock	Investment	Stock's Beta Coefficient
A	$160 million	0.8
B	120 million	1.4
C	80 million	1.8
D	80 million	1.0
E	60 million	1.8

Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 5%, and you believe the following probability distribution for future market returns is realistic:

Probability	Market Return
0.1	-29	%
0.2	0
0.4	13
0.2	28
0.1	50

1. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.)
   1. r_i = 6.8% + (7.9%)b_i
   2. r_i = 6.8% + (6.8%)b_i
   3. r_i = 5.0% + (7.9%)b_i
   4. r_i = 2.6% + (8.0%)b_i
   5. r_i = 5.0% + (6.8%)b_i

2. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places.

   %

3. At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places.

   .