1) Assume that the T-Bill cate is 4 percent, and the expected return on the market portfolio (e.g. S&P 500) is 12 percent. Using the CAPM, answer the following a. What is the risk premium on the market portfolio? b. What is the expected return on an asset with a beta of 1.5? 12-4 c. Draw a graph showing how the expected return on any asset varies with its beta (ẞ). That is, draw the security market line (SML). d. If an investment project with a beta of 0.8 offers an expected return of 9.8 percent, should you do the project? Briefly explain why or why not. d. If the market expects a return of 11.2 percent from this stock, what is its beta? (draw the SML) 11.2-812-4/ 2) Assume that the T-Bill rate is 7 percent, and the expected return on the market portfolio (e.g. S&P 500) is 10 percent. Using the CAPM, answer the following a. What is the risk premium on the market portfolio? b. What is the expected return on an asset with a beta of 0.5? E(R) 7 10-7-8% c. Draw a graph showing how the expected return on any asset varies with its beta (B). That is, draw the security market line (SML). Yes. d. If an investment project with a beta of 1.1 offers an expected return of 12.5 percent, should you do the project? Briefly explain why or why not. d. If the market expects a return of 9.5 percent from this stock, what is its beta?