Question: please help 11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors


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 qraph, complete the table that follows: An anolyst belleves that inflation is going to increase by 2.0% 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. Colculate Happy Corp.'s new required return. Then, on the graph, use the green points (rrectangle syrnbols) to plot the new SML suggested by this analyst's prediction. Happy Corpis new required rate of return is The SML helps determine the level of risk aversion among investors. The higher the level of risk aversion, the the slope of the SML. Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?) High-beta stocks All stocks affected the same, regardless of beta Low-beta stocks Medium-beta stocks
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