Question: Show how to estimate beta using regression analysis. ( 1 ) Suppose the risk - free rate goes up to 7 % . What effect

Show how to estimate beta using regression analysis.
(1) Suppose the risk-free rate goes up to 7%. What effect would higher interest rates have on the SML and on the returns required on high-risk and low-risk securities?
(2) Suppose instead that investors risk aversion increased enough to cause the market risk premium to increase to 8%.

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