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The SML relates required returns to firms' systematic (or market) risk. The slope of this line ( the market risk premium, R m - R

The SML relates required returns to firms' systematic (or market) risk. The slope of this line ( the market risk premium, Rm - Rf) and intercept of this line (the risk-free rate, Rf) cannot be influenced by firm-specific managerial actions. However, a firm can change its beta through managerial decisions, such as changing business models.

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