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NISA [10]
3 years ago
12

Sarah has a backache due to overexertion. She believes a massage would loosen her back muscles and help her feel better. She is

concerned because a massage, unlike a pair of shoes, cannot be experienced or seen before she buys it. Which characteristic of services is she concerned about?
a.incongruity
b.inconsistency
c.intangibility
d.inventory costs
e.inseparability
Social Studies
2 answers:
Snezhnost [94]3 years ago
4 0

Answer: C.) Intangibility

Explanation: Goods and services vary in attributes. Some goods do not exhibit physicality, such goods are impossible to hold or examine physically in terms of quantity, weight, texture and other physical factors or attributes of a good. Goods or services of this nature or characteristic is called service Intangibility. In the scenario above, offering massage service is a very good example of intangible service because it cannot be physically examined or felt before purchase unlike goods such as clothes, shoes and other goods which can be physically assessed.

AleksandrR [38]3 years ago
3 0

Answer :

intangibility of service

Explanation:

Intangibility of service or service intangibility refers to the characteristic of service that defines services that may lack physical attributes such that a consumer is not able to determine or assess the value of the service before he/she purchases. In other words the customer cannot find out with tangible evidence what the outcome of the service would be before purchasing the service

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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:

brainly.com/question/15877803

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