Question: 8. Changes to the security market line The following graph plots the cument security market line (SML and indicates the return that investors require from

8. Changes to the security market line The following graph plots the cument security market line (SML and indicates the return that investors

8. Changes to the security market line The following graph plots the cument 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. REQUIRED RATE OF RETURN IPercent) 20.0 16.0 Return 12.0 HC's Sto 8.0 4.0 0.0 RISK IBetal CAPM Elements Value Risk-free rate KrRF) Market risk premium (RPN) Happy Corp. stock's beta Required rate of return on Happy Corp. stock An analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium wil be unchanged. The analyst uses the Capital Asset Pridn Model (CAPM). The following graph plots the cument SMI g late Happy Corp.'s new required return. Then, on the graph, use the green points (rectangle symbols) to plot Calou the new SML suggested by thi analyst's prediction. Happy Corp.'s new required rate of return is

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