GAGE MINDTAP Risk and Rates of Return REQUIRED RATE OF RETURN (Percent) 20.0 Return on HC's Stock 1.5 20 RISK (Beta) Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock HW 07 - Risk and Rates of Return An analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, use the green points (rectangle symbols) to plot the new SML suggested by this analyst's prediction Happy Corp.'s new required rate of return is Tooltip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURN (Percent) New SML 16 RISK (Betal Clear All