Write risky asset i’s return as R . In the standard deviation – expected return ( J . R ) space , the coordinates of’ R, are donated by ( J . The…

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5. Write risky asset i’s return as R . . In the standard deviation – expected return ( J . R ) space ,the coordinates of’ R, are donated by ( J . R. J. The correlation coefficient of R ; with themarket return R is denoted by pim . The risk- free return is assumed to be Ry. Supposeall assumptions for CAPNT hold .1 ) The standard deviation measures the total risk of a risky asset’s return . If only*systematic risk is included , what are the coordinates of R, in the standard deviation -expected return space?”in If we link all the points across different assets i with cach point’s coordinates being*given in I ), prove that these points form a straight line . Give the mathematical equationof the straight line . ( Hint : you may refer to the proof on pages 27 – 28 in lecture note 2 ) .In1 ) What is the mathematical equation for SMIL in the beta-expected return ( B , R ) space ?iv s Compare the slope of the two mathematical equations given in In ) and ill ) . What is therelationship between the two mathematical equations !V ) Provide economic interpretation intuition for the above results .

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