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:
The most difficult task confronting many Southerners during Reconstruction was devising a new system of labor to replace the shattered world of slavery. The economic lives of planters, former slaves, and nonslaveholding whites, were transformed after the Civil War.
Explanation:
initiator-contributer - suggest goals, procedures, and strategies
help-seeker - puts self down; tries to gain sympathy through confusion about group needs and goals
follower - often functions as an audience rather than an active participant; goes along with the leadership of more aggressive members often functions as an audience rather than an active participant; goes along with the leadership of more aggressive members
opinion seeker - asks other members for their opinions on relevant issues
observer and commentator - keeps record of group interactions and provides information for group evaluation
Answer:
American workers were upset at the time of the 1896 election because of the poor working conditions, wages, and long hours.
Explanation:
Polystyrene sulfonate is one way out. The nurse should monitor the patient's Serum potassium level because a decreased potassium level places the patient at increased risk of digoxin toxicity. Normal potassium level is 3.5 to 5.0 mEq/L, and a result less than 3.5 should be immediately reported to the provider due the the risk for sudden dysrhythmias. Polystyrene sulfonates are a group of medications used to treat high blood potassium.
Water pills (diuretics) help rid your body of extra potassium. They work by making your kidney create more urine. Potassium is normally removed through urine. Potassium binders often come in the form of a powder.
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