Question: Tool tip: Mouse over the points on the graph to see their coordinates REQUIRED RATE OF RETURN (Percent) 20 New SML 16 12 0.0 0.4

Tool tip: Mouse over the points on the graph to see

their coordinates REQUIRED RATE OF RETURN (Percent) 20 New SML 16 12

Tool tip: Mouse over the points on the graph to see their coordinates REQUIRED RATE OF RETURN (Percent) 20 New SML 16 12 0.0 0.4 0.8 12 1.6 2.0 RISK (Beta) The SML helps determine the risk-aversion level among investors. The higher the level of risk aversion, the the slope of the SML Which of the following statements best describes a shift in the SML caused by increased risk aversion? O The risk-free rate will increase. O The risk-free rate will decrease. O The risk-free rate will remain constant. Tool tip: Mouse over the points on the graph to see their coordinates REQUIRED RATE OF RETURN (Percent) 20 New SML 16 12 0.0 0.4 0.8 12 1.6 2.0 RISK (Beta) The SML helps determine the risk-aversion level among investors. The higher the level of risk aversion, the the slope of the SML Which of the following statements best describes a shift in the SML caused by increased risk aversion? O The risk-free rate will increase. O The risk-free rate will decrease. O The risk-free rate will remain constant

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