11. Changes to the security merket line The following graph plots the current security market line (SM.) And indicates the return that investons require fiom holding stock from ilappy Com: (HC). Based on the graph, complete the table that follows: An analyst believes that inflation is going to increase by 3.0% over the next year, while the market risk premlum 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 Corp.'s new required rate of return is Tool tip: Mouse over the points on the graph to see their coordinates; Ch 08- Assignment - Risk and Rates of Return The SML helps determine the risk-aversion level among investors. The higher the lovel of risk aversion, the the slope of the SML. Which of the following statements best describes the shape of the 5ML if investors were not at all risk averse? The SML would be a horizontal line. 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 ayerse. The SML would have a positive slope, but the slope would be fiatter than it would be if investors were risk averse