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 graph, complete the table that follows.

$\backslash$table$[[$CAPM Elements,Value$],[$Risk$-$free rate $(r_{RF}),2\mathrm{.}0\%{?}_{?}$

An analyst believes that inflation is going to increase by $3\mathrm{.}0\%$ 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.$\text{'}$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.$\text{'}$s new required rate of return is $$

Tool tip: Mouse over the points on the graph to see their coordinates.

$(?)$

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?$)$

Medium$-$beta stocks

High$-$beta stocks

All stocks affected the same, regardless of beta

Low$-$beta stocks