Your security is overprice, its portfolio beta is 0.85, its required rate of return is 5.35% and its expected rate of return is -0.27 (-0.27%)

Justify this using the security market line. Label x asis and y axis intercept. Clearly present X and Y axis when you located your portfolio in the graph.

A example of a security market line graph is illustrated in the photo below:

Under-priced buy! Security market line (SML) E[R] (Rt) 0 0.5 1 1.5 Beta [B]