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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<span>These are called radicals. Radicals are found on the far left of the political spectrum. This is a person who advocates a complete political or social reform who is a member of a political party that has these same aims.</span>
Many public figures defend the correlation between the access to violence in media sources and real-world violence and aggression. Back in the 5th century B.C , even Plato worried about the possible effects of violence and that violent themes in plays would have in society. Nowadays, some scholars speculate that some fans of such media may become more aggressive or immoral. Yet, nothing has been proved, and the correlation between violent media and actual violence are still considered inconclusive. <u>Some social scientists who believe in the correspondence of violence and violent media</u>; however, <u>believe that violent media would cause gamers to lose empathy towards the victims displayed in the media and thus more likely to commit acts of violence.</u>
Hi there hope this helps you and is enough!
Answer:
People in the industry call it Mathematical Songwriting
Explanation:
It is called mathematical songwriting because songs are written in accordance with the order, structure, relation and rhythm of the beat. Songs produced by mathematical songwriting are captivating and go on to be commercially successful because they become popular on radio stations and streaming services.
