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The stope of the Security Market Line (SML) reflects the degree of risk aversion in the economy-the greater the average investor's risk aversion, (a) the

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The stope of the Security Market Line (SML) reflects the degree of risk aversion in the economy-the greater the average investor's risk aversion, (a) the steeper the slope of the line and (b) the greater the risk premium for all stocks hence, the higher the required rate of retirn on all stocks

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