A)

Shifts in the security market line Assume that the risk-free rate. R_F. is currently 9%. the market return, r_m, is 17%. and asset A has a beta. b_A. of 0.78. Use CAPM to estimate the required return. r_A, on asset A. Which of the following graphs represents the security market line (SML) and the required return for asset A? Assume that as a result of recent economic events, inflationary expectations have declined by 2%, lowering R_F and r_m to 7% and 15%, respectively. Which of the following graphs represents the new SML and shows the new required return for asset A? Assume that as a result of recent events, investors have become more risk averse, causing the market return to rise by 1%. to 18%. Ignoring the shift in part b, which of the following graphs shows the new SML and the new required return for asset A? The required rate of return on asset A is 15.24 %. (Round to two decimal places.) Which of the following graphs represents the security market line (SML) and the required return for asset A? (Select the best answer below.)