Question 8 :Which of the following statements is (are) true?

• Statement 1. If all investors become more risk averse, the security market line will have the same intercept but with a flatter slope, and stock prices will increase.
• Statement 2. If all investors become less risk averse, the security market line will have the same intercept but with a flatter slope, and stock prices will decrease.
• Statement 3. If all investors become more risk averse, the security market line will have a parallel shift upward and stock prices will increase.
• Statement 4. If all investors become more risk averse, the security market line will have a parallel shift downward and stock prices will decrease.

1. Statement 1
2. Statement 2
3. Statement 3
4. Statement 4
5. None of the statements