In the past, developmentalists believed that human intelligence is Static, whereas now it is commonly understood that intelligence is malleable.
Human intelligence:
- The capacity to learn from experience, adapt to novel circumstances, comprehend and manage abstract concepts, and apply information to influence one's surroundings are all components of human intelligence.
- Humans are cognitively capable of learning, forming concepts, understanding, applying logic and reason, as well as the capacities to recognize patterns, plan, innovate, solve problems, make decisions, retain information, and use language to communicate. These abilities are all a part of intelligence.
- Humans are often regarded as the most intellectual species on the planet; humans possess large brains that are superior to those of other animals in terms of processing speed and cognitive ability. In actuality, during millions of years of evolution, humans have demonstrated a tremendous growth in brain size and intelligence.
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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.
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The answer is 1 I think because opportunity cost is giving up one thing for another as far as I know
<span>Littoral zones are more likely to contain vegetation than riparian zones. The statement presented is False. A r</span>iparian zone<span> or </span>riparian area<span> is the interface between land and a </span>river<span> or </span>stream<span>. </span>Riparian<span> is also the proper nomenclature for one of the fifteen terrestrial </span>biomes<span> of the earth.</span>
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