Draw the security market line (SML)and plot asset C such that it has less risk than the market but plots above the SML,and asset D such that it has more risk than the market and plots below the SML.(Be sure to indicate where the market portfolio is on your graph. )Explain how assets like C or D can plot as they do and explain why such pricing cannot persist in a market that is in equilibrium.

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The Answer of Draw the security market line (SML)and plot asset C such that it has less risk than the market but plots above the SML,and asset D such that it has more risk than the market and plots below the SML.(Be sure to indicate where the market portfolio is on your graph. )Explain how assets like C or D can plot as they do and explain why such pricing cannot persist in a market that is in equilibrium.

Draw the Security Market Line (SML)and Plot Asset C Such