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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Answer: In the carrot scenario, Derek is able to find carrots at the price he wishes to pay because one competitor offers a lower price. That competitor is successful in making a sale and competition causes the consumer to keep looking until the desired price is found. Likewise in the computer scenario, Melissa still searches in a number of places for the desired computer. Competition again is driving the consumer action of shopping around. However, in this case, the consumer is unable to find the desired price and ultimately decides that since all competitors are asking the same price, this must be a fair market price. In that case Melissa wants the model she wants and is willing to pay a higher price for it, but only after exhausting all of her available options by checking out many competitor prices.
Oblong facial shape can be visually shortened by applying deeper tones under the chin and horizontally at the hairline.
To applying deeper tones under the chin and horizontally at the hairline on rectangular, narrow, long and angular faces can visually shortened.it is characterized by a broad, straight forehead and square jawline.
Oblong facial shape: Tends to be long, narrow, and angular
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Answer:
dementia
Explanation:
Dementia: In abnormal psychology, the term "dementia" is described as an overall term associated with specific diseases and related conditions that are being distinguished as a decline in an individual's memory, thinking skills, language, and problems solving tendency that affects his or her capability of performing day-to-day activities.
Example: Memory loss.
Cause: Alzheimer disease.
In the question above, the given statement represents dementia.
<span>An increase in the demand for bubble gum might be caused: by </span>the fact that blowing bubbles is now a popular activity
In marketing, bubble gum is considered as an Unsought product, which is a type of product that wouldn't be bought by customers under normal conditions. This type of products usually had a really high demand when it still becomes a trend and will dramatically decrease as soon as the trend faded out.
