Many developing countries from Middle East to South America have attempted to master the process of development but have failed.
And one of the major reasons behind this is "Domestic Monopoly Power." Most of these countries are trapped in their local markets and do not open their markets internationally.
Domestic group interests have small incentives to open up their markets to international firms with advanced technologies.
However, if they even try to open their borders, they still remain trapped in low or middle levels of income.That's why poor countries remain poor over the period of time.
Answer: Chemical compound, any substance composed of identical molecules consisting of atoms of two or more chemical elements
Explanation:
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:
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Answer:History continues to prove the wisdom of the Founders' belief in the unity of both political and economic freedom. ... Then, as now, some have wanted government to impose regulations, tariffs, taxes, or other interventions to protect and advantage certain activities and to minimize economic risk.
Explanation:
Freedom itself was important to our country's Founders. Our right to be free was built into the Constitution, especially in the Bill of Rights, which prevented Congress from passing laws that infringe upon our freedoms. ... Because our natural rights come from God, and not from other people, or the government.
Hope it helps!!
C i think is the right answer
