A. Illustrate graphically, and clearly explain the Security Market Line (?SML), and the risk premiums of 1) a market portfolio with a return of 10 percent, and 2) a security with a beta coefficient of 1.5 and expected the return of 15 percent. Assume the risk-free rate is 5 percent.
B, Illustrate graphically, and clearly explain the concept of Acme Company's Characteristic line.
What does the Characteristic Line show?
Who originated it and why?