Alcohol
Past trauma
Neurological issue
Etc
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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The correct answer is B) Averting behavior.
Environmental economists seek to implement a study to examine public preferences for alternative forest landscapes. Respondents are asked to choose one of several plans that depict environmental changes from the baseline condition of forests. The nonmarket valuation method that describes this study is Averting behavior.
When trying to find answers in this type of research to know the preferences of the public regarding alternatives to help the forest, the Avertin behavior method helps researches to find useful answers. When applying this research model, researches presume that people interviewed are prone to participate and do something that prevents the consequences mentioned in the question. It takes into consideration that people will do what it takes in order to limit or avoid the negative consequences presented.
Answer:
D) I, II and III
Explanation:
i. Shelter Belts
Strong wind typically carry enough force to destroy the surface of the farm's land, which will accelerate the rate of land degradation. Usually, farmers put shelters belts at the edge of the farm to block such winds and prevent the soil degradation.
ii. No till farming
In this method of farming, Farmers avoid the use of tools that will destroy the composition of the soil (Such as shovel or rake). They plant the crops by creating as little disruption as possible to the soil to prevent soil degradation
iii. Animal graze over plowing.
The concept is similar to no-till farming. Animal plowing usually conducted by making a buffalo carried a giant rake to destroy the soil and provide spaces for Fertilizer. Animal graze will eliminate the use of the rake and prevent soil degradation.
