The market risk premium calculates the slope of the security market line.
What is market risk premium?
A risk premium is the higher rate of returns you can expect from riskier investments like stocks compared to risk-free investments like government bonds. The pricing model for capital assets is graphically represented by the security market line (SML), a line drawn on a graph. The SML can be used to assist in trying to compare an investment product's rate of return towards its level of risk.
Numerous exogenous factors can have an impact on the slope of a security market line. For instance, the economy's real interest rate could change, inflation might rise or fall, there could be a recession, and investors could start to take less risk generally.
In other words, higher risk also comes with higher rewards because more systematic risk is linked to higher expected returns for securities. The linear relationship also explains why security market line is indeed a straight line.
Learn more about security market line click here:
brainly.com/question/15877803
#SPJ4
Explanation:
Roughly one out of every thousand stars that form is massive enough to become a black hole. Therefore, our galaxy must harbor some 100 million stellar-mass black holes. Most of these are invisible to us, and only about a dozen have been identified. The nearest one is some 1,600 lightyears from Earth.
Answer:
Meow
Explanation:
Thx for ur time xfbbxdghbbfzfx xydxydhxgxvvc
Answer:
Olá, boa tarde. Caso precise, estou a disposição para a realização de trabalhos acadêmicos, entre em contato comigo, Fernanda 21994321300
Explanation:
