Draw the original SML and the new SML in the same graph

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Question - Assume risk-free rate is 4% and the market return is 10%. If the inflation increased in the market leading risk-free rate increased to 6%, what will be the change to SML? Draw the original SML and the new SML in the same graph (not in two separate graphs) to show the change. If stock A's beta is 1.6, what will be its required return before and after the change?

Reference no: EM132905321

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