Graphing the security market line

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A regression was run in Stock B and market proxy portfolio, S&P 500. The regression line is defined as: Y =8.3+1.2X. If risk-free rate is 4%, the market risk premium is 6%, and market return on Stock B is 10.5%,
[A] Graph the security market line (SML) for Stock B.
[B] Decide if Stock B is overpriced, under-priced, or in equilibrium with the Capital Asset Pricing Model (CAPM).

Reference no: EM1373110

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