As of late April the US risk-free rate is approximately 1%. Assume for the moment that market risk is 7% due to the pandemic. Answer the following questions:

1. What is the required return for the company you used for the financial analysis project? Show your calculations.
2. The risk-free rate and market risk above define a Security Market Line (SML). If the risk-free rate were to rise to 1.5% next month, how would that change the SML? Explain your answer.
3. Assume instead of the change in B that the market risk declined to a more normal 5% by September. How would that change the SML defined by the original conditions? Explain your answer.