(a) The equation of the Security Market Line.
(b) The required return for the Ujasiri Company Limited.
(c) Is the Company correctly priced, underpriced or overpriced in the market? Explain.
(b) The required return for Ujasiri: Ru = 6.6% + 5.4% * 1.27 = 12.92%
(c) The Company is overpriced in the market.
Reason: expected return is less than required return implying that compensation for its level of risk is inadequate.