11. Changes to the security market line The following graph plots the current security market Ine (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: An analysk believes that infation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Caplial Awset Fricing Model (CADM). The following graph piots the current SML. Calculate Happy Comis new required recurn. Then, on the graph, use the green points (rectangle symbols) to plot the new sul. suggested by this analysts prediction. Happy Corp.'s neiw required rate of return is Tool tip: Mouse over the points on the graph to see their coordinates. Tool tip: Mouse over the points on the graph to see their coordinates. The SML helps determine the risk-dversion level among investors. The steeper the slope of the SML, the the level of risk aversion. Which of the following statements best describes the shape of the SML. If investors were not at all risk averse? The SML would have a negative slope. The SML. would have a positive slope, but the slope would be steeper than it would be if investors were risk averse. The 5ML. would have a positive slope, but the slope would be flatter than it would be if investors were risk averse. The SML would be a horizontal line