Assignment 08 - Risk and Rates of Return The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN Percent 20.0 Return on HC's Stock RISK (Betal Value CAPM Elements Risk-free rate (r) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock 1.1% 2.2% 8.0% 2.096 Assignment 08 - Risk and Rates of Return The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 Return on 0.5 1.0 1.5 RISK Betal Value CAPM Elements Risk-free rate (n) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock Assignment 08. Risk and Rates of Return The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN Percent Return on HC'S Stock 10 1.5 20 RISK Betal Value CAPM Elements Risk-free rate (m) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock 10.0% 6.8% 8.0% 7.29 Assignment 08 - Risk and Rates of Return the new SML suggested by this analyst's prediction. Happy Corp.'s new required rate of return is 11.0% Tool tip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURN (Percent) New SML 0.0 0.4 0.8 1.2 1.6 2.0 RISK I Betal Clear All The SML helps determine the level of risk aversion among investors. The steeper the slope of the SML, the lower the level of risk aversion