Question: Tool tip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURN (Percent) 20 16 12 8 4 0.0

Tool tip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURN (Percent) 20 16 12 8 4 0.0 0.4 0.8 1.2 1.6 New SML 2.0 RISK (Beta) 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? O The risk-free rate will decrease. O The risk-free rate will remain constant. O The risk-free rate will increase.

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