What is the equation of the security market line

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You are given the following equilibrium expected returns and risks:

E(Ra)= 12.2%; E(Rb)= 15.5%; Beta A= .7; Beta B= 1.25

a. What is the equation of the security market line?

b. A portfolio made up of A (above) and another security, has a beta of 1.10 and expected return of 13%. Which one would you rather buy: A alone or both? Why?

Plese can your answer be with a small explanation.

Reference no: EM131669315

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