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20 New SML 16 REQUIRED RATE OF RETURN (Percent) 0 0 0.4 1.6 2.0 0.8 1.2 RISK (Beta) The SML helps determine the risk-aversion level

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20 New SML 16 REQUIRED RATE OF RETURN (Percent) 0 0 0.4 1.6 2.0 0.8 1.2 RISK (Beta) The SML helps determine the risk-aversion level among investors. The steeper the slope of the SML, the the level of risk aversion. Which of the following statements best describes a shift in the SML caused by increased risk aversion? The risk-free rate will increase. The risk-free rate will remain constant. The risk-free rate will decrease

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