Fill in the blanks Shift in SML caused by increased risk aversion.pdf 119 KB The following graph presents the shift in the Security Market Line (SML) caused by increased risk aversion. The X-axis measures the beta while the Y-axis measures the required rate of return. Case 1 presents the base case and case 2 represents increased risk aversion. (State 5 answers with correct question number responses. Incomplete / illegible answers will not be marked.) 1. According to the CAPM, measures the 2. From the graph, the return of an "average stock has of 3. The return on the market (r_m) in case 1 is 4. If the market risk premium increases to 7, and assuming the stock has a beta of 0.7, the required return on the stock will be 5. Point A can be calculated to be