Question: please draw the line on the graph CAPM Elements Risk-free rate (TR) Market risk premium (RPM) Happy Corp, stock's beta Required rate of return on

CAPM Elements Risk-free rate (TR) Market risk premium (RPM) Happy Corp, stock's beta Required rate of return on Happy Corp. stock 8.0% An analyst believes that inflation is going to increase by 3.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, 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 11.0% Tool tip: Mouse over the points on the graph to see their coordinates. Value 8.0% - 6.0% 1.0 Tool tip: Mouse over the points on the graph to see their coordinates. 20 REQUIRED RATE OF RETURN (Percent) 04 0.8 12 RISK (Beta) 1.0 20 11 10 New SML ? CAPM Elements Risk-free rate (TR) Market risk premium (RPM) Happy Corp, stock's beta Required rate of return on Happy Corp. stock 8.0% An analyst believes that inflation is going to increase by 3.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, 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 11.0% Tool tip: Mouse over the points on the graph to see their coordinates. Value 8.0% - 6.0% 1.0 Tool tip: Mouse over the points on the graph to see their coordinates. 20 REQUIRED RATE OF RETURN (Percent) 04 0.8 12 RISK (Beta) 1.0 20 11 10 New SML
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