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.
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<span>The human brain does not fully develop until age 25. A person's emotional maturity, self-image, and judgement are affected as these traits are linked to development of the prefrontal cortex. As a result, adolescents require guidance until reaching maturity.</span>
Answer:
Noise
Explanation:
Noise can be described as a type of sound that causes distraction; this sound can be generated from various sources. It is a major hurdle to active listening as it disrupts an individual's ability to understand the message that is being communicated correctly.
Active listening requires an environment that is free from any type of strange sound which is capable of placing a barrier to proper communication.
In the scenario described above, the sound coming from the campus landscaper that was mowing the lawn is an example of noise. This sound coming from the lawnmower hinders the audience from understanding the message that is being passed during the student's presentation.
Answer:
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Plot and detection. The plot was conceived by Sheikh Mujib in an attempt to ignite an armed revolution against West Pakistan that would result in the secession. ... The alleged conspiracy was uncovered by Lieutenant Colonel Shamsul Alam, who commanded the East Pakistan Detachment of the Inter-Services Intelligence (ISI).
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The religion of the Muslims, a monotheistic faith regarded as revealed through Muhammad as the Prophet of Allah
