If the Fed raises the interest rates on short-term U.S. government bonds, then the Security Market Line shifts

Question

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When the Fed raises the interest rates on short-term U.S. government bonds, it increases the risk-free rate. The Security Market Line (SML), which represents the expected return of a security as a function of its beta with the market, shifts upward because the risk-free rate is part of the intercept of the SML equation. Higher risk-free rates mean investors require higher returns for any given level of risk, thus shifting the SML upward.

If the Fed Raises the Interest Rates on Short-Term U