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: Passive solar technology
Explanation:
Passive solar technology is the method of using materials to attract sunlight for warmth. Solar energy is the energy that comes from the sun. To store this energy gotten from the sun you'll need some elements to transfer this energy then store them. According to the passage the individual used a black material (black material is used for conveying and storing heat, it's one of the best form for doing so), the black material and the water helps warm the water needed for the individual after his hiking which actually worked.
Answer:Consider the ending as therapeutic. ...
Orient and collaborate. ...
Reflect and summarize. ...
Use verbal and nonverbal communication. ...
Be flexible. ...
Practice and try, try again.
Explanation: just do it ong
There are 13 stripes in the American Flag. Which represents the 13 states.
Answer:
Has an exposure to negligent misrepresentation.
Explanation:
Negligent misrepresentation occurs when a person, in this case the agent in the exercise, has made a statement about something or someone (in this case a property) without having any reason to believe it true. As the name says, negligent misrepresentation; the agent should've noticed a clearly visible and obvious problem (negligence) and then he said it was all ok (misrepresentation).
