Other things held constant, if the expected inflation rate decreases and investors also become more risk averse, the Security Market Line would be affected as follows: Answer The y-axis intercept would decline, and the slope would increase. The x-axis intercept would decline, and the slope would increase. The y-axis intercept would increase, and the slope would decline. The SML would be affected only if betas changed. Both the y-axis intercept and the slope would increase, leading to higher required returns