Consider another situation involving the SML$.$ Suppose that the risk$-$free interest rate stays the same, but that investors$$ dislike of risk grows more intense.

Given this change, will average expected rates of return rise or fall?

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Next, compare what will happen to the rates of return on low$-$risk and high$-$risk investments. Which will have a larger increase in average expected rates of return, investments with high betas or investments with low betas?

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Will high$-$beta or low$-$beta investments show larger percentage changes in their prices?

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