8-11 How are total risk, nondiversifiable risk, and diversifiable risk related? Why is nondiversifiable risk the only relevant risk? 8-12 What risk does beta measure? How can you find the beta of a portfolio? 8-13 Explain the meaning of each variable in the capital asset pricing model (CAPM) equation. What is the security market line (SML)? 8-14 What impact would the following changes have on the security market line and therefore on the required return for a given level of risk? (a) An increase in inflationary expectations. (b) Investors become less risk averse