Give the mechanism of the reaction shown below. 
Definitions:
Inherent Risk
The possibility of inaccurate financial statements due to factors other than failure of control, covering areas such as industry characteristics and overall economic environment.
SML
The Security Market Line, a graphical representation of the Capital Asset Pricing Model showing the relationship between the expected return of a security and its beta (systematic risk).
Required Returns
The minimum expected return on an investment, determined by the investor's risk tolerance and the investment's risk level.
Diversifiable Risks
Risks that can be reduced or eliminated through diversification in an investment portfolio.
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