11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 8.0 4.0 0.5 Retum on HC's Stock 1.0 RISK (Beta) Ch 08: Assignment - Risk and Rates of Return REQUIRED RATE OF RETURN (Percent) => 2 0 12 RISK (Beta) On 1.6 20 New SML the level of risk aversion. The SML helps determine the level of risk aversion among investors. The steeper the slope of the SML, the Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?) High-beta stocks All stocks affected the same, regardless of beta Low-beta stocks Medium-beta stocks Ch 08: Assignment - Risk and Rates of Return. REQUIRED RATE OF RETURN (Percent) 2 A 04 On 12 RISK (Beta) 18 20 New SML the level of risk aversion. The SML helps determine the level of risk aversion among investors. The steeper the slope of the SML, the Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?) High-beta stocks All stocks affected the same, regardless of beta Low-beta stocks Medium-beta stocks