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Assume that expected inflation increases by 0.25 percent and concerns about a possible trade war cause the market risk premium to rise by 1.2 percent.

Assume that expected inflation increases by 0.25 percent and concerns about a possible trade war cause the market risk premium to rise by 1.2 percent. Add labels and lines to the following diagram and explain the impact that these developments will have on the security market line (SML) and on the value of your portfolio. (10 pts)

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