The following question should be answered for the general case rather than refer to your data (i.e., do not answer by changing variables in your data). Assume that each of following parameters increases (one at a time), and everything else remains the same. What will this change mean for the over/under pricing of stocks with respect to the SML? Your answer should be based on the SML equation. You can answer by drawing a graph or by examining the impact of the parameter change on the SML equation).

(i) The risk-free rate

(ii) The return on the market index.

(iii) The return on each of the securities.

(iv) The correlation of each of the securities return with the return on the market index.