1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Nina [5.8K]
1 year ago
9

Other things held constant, if investors become more risk averse, the security market line (sml) would (2 points)

Social Studies
1 answer:
poizon [28]1 year ago
6 0

Other things held constant, if the expected inflation rate DECREASES, and investors also become MORE risk averse, the Security Market Line would shift in<u> have a steeper slope </u>manner.

<h3>What is the Security Market Line (SML)?</h3>

The security market line (SML) is the Capital Asset Pricing Model (CAPM). It gives the market’s expected return at different levels of systematic or market risk. It is also called the ‘characteristic line’ where the x-axis represents the asset’s beta or risk, and the y-axis represents the expected return.

<u>Security Market Line Equation</u>

The Equation is as follows:

SML: E(Ri) = Rf + βi [E(RM) – Rf]

In the above security market line formula:

  • E(Ri) is the expected return on the security.
  • Rf is the risk-free rate and represents the y-intercept of the SML.
  • βi is a non-diversifiable or systematic risk. It is the most crucial factor in SML. We will discuss this in detail in this article.
  • E(RM) is expected to return on market portfolio M.
  • E(RM) – Rf is known as Market Risk Premium.

<u>Characteristics of the Security Market Line (SML) are as below:</u>

  • SML is a good representation of investment opportunity cost, which combines the risk-free asset and the market portfolio.
  • Zero-beta security or zero-beta portfolio has an expected return on the portfolio, which is equal to the risk-free rate.
  • The slope of the Security Market Line is determined by the market risk premium, which is: (E(RM) – Rf). Higher the market risk premium steeper the slope and vice-versa
  • All the assets which are correctly priced are represented on SML.
  • The assets above the SML are undervalued as they give a higher expected return for a given amount of risk.
  • The assets below the SML are overvalued as they have lower expected returns for the same amount of risk.

Therefore, we can conclude that the correct option is A.

Learn more about Security Market Line (SML) on:

brainly.com/question/15877803

#SPJ4

You might be interested in
Which scenario is an example of a parent serving as social manager in the socialization of generosity? Group of answer choices T
skelet666 [1.2K]

Answer:

Tanya's mother signs her child up for volunteer work at the local hospital after school.

Explanation:

The social manager is an individual who holds the responsibility of representing a person (usually an artist or celebrity) or company across social channels as the main representative of the artist or brand. S/He works in the area of looking for good deals, signing of the contract, managing artistes or  brands, and as well providing advice and guidance required to strengthen their public presence.

Hence, in this case, an example of a parent serving as a social manager in the socialization of generosity is " Tanya's mother signs her child up for volunteer work at the local hospital after school."

4 0
3 years ago
After serving as her partner's primary caretaker for 10 years, Sasha is in the final stage of grieving her partner's death, as d
Sliva [168]

Answer:

The correct response is: Sasha is in the final stage of grieving her partner's death as demonstrated by her newfound self-reliance and greater appreciation for life.

Explanation:

According to psychiatrist Elizabeth Kübler-Ross, there are 5 stages of grief: denial ; anger ; bargaining;  depression; and  acceptance.  Sasha experiences a major change in her life and she probably went through stages of grief where she felt upended about many things. In the acceptance stage of grief, a person starts to see there are more good days than bad, although they may still feel remorse and longing from time to time, which is normal. At the acceptance stage, a grieving partner can start to feel fortunate for having time with their deceased partner and for having fond memories.

4 0
3 years ago
Anu ang modular Distance Learning?​
laiz [17]

Answer:

ayan daw ung meaning bhie

3 0
3 years ago
CQ 1: Imagine you want to learn more about Mike Smith’s osteosarcoma. How could you use microarray technology to determine which
allsm [11]

Answer:

you could use the microarray technology to see which genes his cancer cells have increased, lessened, turned on, or turned off.

Explanation:

Microarray technology is a unique tool used almost exclusively in molecular biology, since it is able of counting hundreds or thousands of gene transcripts from a specific cell or tissue sample at the same time. Therefore based on the information provided within the question it can be said that in this scenario you could use the microarray technology to see which genes his cancer cells have increased, lessened, turned on, or turned off.

4 0
3 years ago
All queries with a user location have both visit-in-person and non-visit-in-person intent.
Setler [38]

Answer:

the answer to that question is TRUE it is very true.

3 0
3 years ago
Read 2 more answers
Other questions:
  • Jean-Martin Charcot and Pierre Janet were interested in a condition that results in the temporary loss of motor control or cogni
    6·1 answer
  • What is the role of the Vice President in determining if the President can do his job?
    11·1 answer
  • What does economy mean
    5·2 answers
  • Based on the information presented in the video, what is the main goal of buying and selling government securities?
    9·2 answers
  • Sleep is a kind of temporary coma. T/F
    11·2 answers
  • Jansen and his listing agent just left the closing on Jansen's house. What kind of notice does Jansen, his agent, the buyer, and
    8·1 answer
  • Dante was walking across campus in a hurry. On the way he saw his friend Aarav, who he hadn’t seen in quite some time. Dante sto
    8·1 answer
  • Why were Drazen and Vlade chosen to be roommate?
    9·1 answer
  • The ability of sugar to dissolve in water is called
    6·2 answers
  • nikolas is homeless, hungry, and desperate for food and shelter. he will do almost anything to satisfy these needs. based on mas
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!