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 Ha (HC). Based on the graph, complete the table that follows: An analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst use the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, use the green points (rectangle symbols) to plot the new SML suggested by this analyst's prediction. Happy Corpi's new required rate of return is Tool tip: Mouse over the points on the groph to see their coordinates. The SML helos determine the level of risk aversion among investors. The higher the level of risk aversion, 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?) Medium-beto stocks AI stocks affected the same, regardless of beta The SML helps determine the level of risk aversion among investors. The higher the level of risk aversion, the the siope of the SML. Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required retums?) Medium-beta stocks All stocks affected the same, regardiess of beta High-beta stocks Low-beta stocks