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The following graph plots the current security market line (SML) and indicates the return that investors require from holding
Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stocks beta Required rate of return on Happy
New SML REQUIRED RATE OF RETURN (Percent) 0.8 RISK (Beta) The SML helps determine the level of risk aversion among investors.


Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stocks beta Required rate of return on Happy
REQUIRED RATE OFF RISK (Beta) The SML helps determine the level of risk aversion among investors. The higher the level of ris
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ANS WEQ the intsapr point Risk - fhue Rate 4.0 Maket Rish Punium 6 Rn- R,: 10% - 1/ >Beta of Jrock 0.6 letun: 7.6 R+ etax N H

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