I'm not sure if my answers are correct for the first 3 questions. ...
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I'm not sure if my answers are correct for the first 3 questions.
11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp (HC). Based on the graph, complete the table that follows: An analyst believes that inflation is going to increa 10.0% over the next year, while the market risk premium will be unchanged. The analyst the Capital Asset Pricing Model (CAPM). The follow 7.2% plots the current SML. Calculate Happy Corp.'s new required return. Then 8.0% raph, use the green points (rectangle symbols) to plot the new SML suggested by this analyst's prediction. Happy Corp.'s new required rate of return is Tool tip: Mouse over the points on the graph to see their coordinates. The SML helps determine the risk-aversion level among investors. The higher the level of risk aversion, the the slope of the SML. Which of the following statements best describes a shift in the SML caused by increased risk aversion? The risk-free rate will remain constant. The risk-free rate will increase. The risk-free rate will decrease
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