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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A fledgling "American identity" had emerged before the war.
<h3>
What did John Adams say about the revolution?</h3>
- During his retirement years, he was fond of saying that the War for Independence was a consequence of the American Revolution.
- The real revolution, he declared, had taken place in the minds and hearts of the colonists in the fifteen years prior to 1776.
- Adams was overseas during much of the Revolutionary War, the fight
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Answer: approach - approach conflict
Explanation: Approach - Approach conflict also called multiple approach conflict ensues when an individual has to make a choice between two desirable options. As when an individual has to choose between two cars which are equally appealing.Approach - Approach conflict swings in the aspect of options which are desirable .This is the opposite of avoidance - avoidance conflict where an individual is stuck in between undesirable choices.
In the scenario above, Moya has to choose between her best friend and new boyfriend where both options are cherished by her.
Answer:
Select the correct statement concerning LIFO liquidations from the following.
a. LIFO liquidations often distort net income and may result in substantial tax payments.
b. LIFO liquidations seldom distort net income and do not result in substantial tax payments.
c. LIFO liquidations often distort net income and do not result in substantial tax payments.
d. LIFO liquidations seldom distort nets income and may result in substantial tax payments.
Explanation:
LIFO liquidation refers to the practice of selling or issuing of older merchandise stock or materials in a company's inventory. Therefore, under the LIFO method, the latest purchased or produced goods are removed and expensed first. And so, the old inventory costs remain on the inventory valuation method.
