Question: a. What determines the vertical intercept of the SML (Security Market Line)?
b. What will happen to an asset's price if its characteristics (risk and rate of return) plot above the SML?
c. If investors dislike of risk grows more intense while the risk-free interest rate is constant, will average expected rates of return rise or fall?
d. Under circumstances described in (c), which assets will have their average rates of return change more, low-risk or high-risk investments? i.e. investments with low betas or high betas?