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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There are in total 435 members in the House Of Representatives. The law set the numbers of House Of Representatives.
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Answer:
You have to break firmly and steadily. That is by driving slowly and carefully around school areas, residential areas , fields,parks e.t.c
Explanation:
School premises or zone put measures in place to ensure the saftey of students and protection of school properties. Drivers are accountant to the safety of the students and must notdrive carelessly in school areas/zones. Normally, the speed limit around school zone are between 15 -25mph so drivers should ensure they Know this and slow down when in this zones
The Executive Department does not call its chief administrator the secretary of the department. This is because the chief administrator of the Executive Department of the Government is the President or the leader of the country. Other people who are in the different branches of the government are appointed by the President because they are a part of his cabinet.
I would say this can be answered with a couple of the choices but ur teacher would probably want Answer D the most. If you have a future in technology and engineering which are high paying fields , learning how to use technology well can be detrimental to having a successful future career.
