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:
An additional contribution to the decline of gladiators was Christianity. ... Therefore gladiator fights still lingered! When Theodosius the Great adopted Nicene Christianity as the state church of the Roman Empire, he would ban all pagan practices and festivals.
Explanation:
tobacco cultivation
Explanation:
- At the moment when the colonists intended to leave Jamestown in the spring of 1610, new settlers with supplies of supplies arrived from England, intending to enrich themselves in Virginia.
- A new group of settlers arrived again under the patronage of King James I. This time, a stronger leadership was envisaged, led by a governor who ruled with a group of advisers and a martial law was introduced that imposed harsh penalties on those who disobeyed it.
- To make a profit for the Virginia company, settlers have ventured into numerous small industries, including glass making, woodworking, resin, tar, and mineral fertilizer production. However, until colonist John Rolfe (who later married Powhatan's daughter Pocahontas) introduced tobacco cultivation around 1613, a money-making plant, none of the colonists' attempts to establish a profitable business proved successful. Tobacco cultivation required large tracts of land and plenty of labor, and stimulated the rapid growth of the Virginia colony.
- The newcomers also settled in the territories occupied by the Powhatan Indians, and the number of servants who came to Virginia increased.
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Answer:
A. Contour
Explanation:
Contour planting is a farming practice that helps reduce or prevent soil erotion through, the planting of crops along the contour.
A contour is are lines developed across a slope at the same level of elevation of the slope. A slope referes to land which slants downwards.
The contours prevent the free flow of rain water down the slope, hence trapping soil particles that would otherwise erode. They also reduce the speed with with running water, goes down the slope.
Answer:
the book will not move its own but it is removed by applying other external force
