What happens to the SML graph in Figure 2-9 when inflation increases or decreases? Figure 2-9 Required

What happens to the SML graph in Figure 2-9 when inflation increases or decreases?

Figure 2-9

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Required Rate of Return (96) TH=16- SML: RF+(RPM) b = 6% + (5%) b M=A=11- 8.5 TRF 6 Low-Risk Stock's Risk Premium: 2.5% Average-Risk Stock's Risk Premium: 5%. This is also the market risk premium. High-Risk Stock's Risk Premium: 10% Risk-Free Rate, RF 0 0.5 1.0 1.5 2.0 20 Risk, b