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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In America, in order to become a citizen, the person has to either be born or naturalized in the country of the United States. A non-citizen; however, is anyone from a different country that does not owe allegiance to the U.S.
There are two ways by which a person can become a U.S citizen by birth: Jus Solis and Jus Sanguinis. Jus Solis is when a person has the right to citizenship for being born in the State or territories. Jus Sanguinis is the right to citizenship when the person has at least one American parent.
Naturalization is the legal process by which non-natives become American citizens. A person who is not a citizen, but wants to become one, has to meet the requirements and go through the U.S naturalization process.
Answer:
the transformation of their group from a dyad to a triad
Explanation:
In the scenario presented in the context, the relationship between Rebecca and Farah changed as Farah included her new friend, Alison to the group and did all the things or activities which Rebecca and Farah used to do together earlier.
The dyad group of Rebecca and Farah changed to triad when Alison was included in the group which affect the relationship between both the friends Rebecca and Farah.
Answer:
Explanation:
Among the merits of federalism are that it promotes policy innovation and political participation and accommodates diversity of opinion. On the subject of policy innovation, Supreme Court Justice Louis Brandeis observed in 1932 that “a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
What Brandeis meant was that states could harness their constitutional authority to engage in policy innovations that might eventually be diffused to other states and at the national level. For example, a number of New Deal breakthroughs, such as child labor laws, were inspired by state policies. Prior to the passage of the Nineteenth Amendment, several states had already granted women the right to vote. California has led the way in establishing standards for fuel emissions and other environmental policies. Recently, the health insurance exchanges run by Connecticut, Kentucky, Rhode Island, and Washington have served as models for other states seeking to improve the performance of their exchanges.
