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:
His ears popping
Explanation:
Conditioned response: In psychology, the term "conditioned response" is described as one of the different parts in the "classical conditioning theory" and is also written as "CR". The theory of classical conditioning was determined by a psychologist named Ivan Pavlov while he was conducting a small experiment in his laboratory on dogs.
A conditioned response is referred to as an organism's behavior that doesn't come out naturally yet it can be leaned by the organisms via the pairing of a "neutral stimulus" with a "potent stimulus" or "unconditioned stimulus".
In the question above, the given statement signifies conditioned response as "his ear-popping".
According to Maslow’s Heirarchy of Needs, three characteristics of someone who is self-actualized include: a high/comfortable self esteem, accurate reality perception, independent, resourceful, creative, and have loving/bonded relationships.
Answer:Improvisation Performance
Explanation:
Improvisation Performance is a spontaneous activity done by using any available resources or tools found at a particular time to do something that was initially planned 0r prepared for. To give a good toast, John drew inspiration from the groom's father's toast when being called out of the blues which he was not prepared for. Giving the toast with the resource available at hand is called improvisation.
