What would happen to the SML if the inflation rate increased? The:

CFA Level II
#1

What would happen to the SML if the inflation rate increased? The: Kaplan says SML moves up?? Do you guys agree? I thought high inflation means less risk adjusted return to SML should move down but answer shown is otherwiese.

#2

risk free rate goes up with inflation,so SML shifts up

#3

INFL - UP —> RFR - UP and SML --> UP

#4

Okie Thanks…