Calculate the slope of sml

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Company Lupa Diri Sdn Bhd has the following stocks: If the Capital Asset Pricing Model (CAPM) holds and beta for Stock A is greater than beta for Stock B by 0.84. Calculate the slope of SML.

State of economy probability of state of economy rate of return if state occur stock A rate of return if state occur stock B

boom 0.56 0.589 0.097

normal 0.15 0.158 0.076

recession 0.29 -0.246 0.042

Reference no: EM132579730

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