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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Jamestown was the first permanent English settlement in North America. It's Americas birth place.
Answer:
Explanation:
Based on the scenario being described within the question it can be said that the most appropriate action would be to send a copy of the informed consent via facsimile to the subject's wife. After she has had the opportunity to speak to the investigator, she can sign the informed consent and fax it back. Doing so would legally bind the consent form so that the consent is valid.
D) a
low instance of banking, finance, and law-related professions.
The South became devoted largely to agriculture, and especially to plantation-style farming. The lack of urban centers was not specifically the cause of a slave economy developing in the South. But it is the case that the plantation economy led to less development of some other professions and institutions that tend to be associated with industries and cities.
The weak position of banking and financial institutions in the South was further weakened by the Civil War. Banking was devastated in the South by the time the war was done. Confederate currency had become essentially worthless. Their whole system of finances needed to be reconstructed during the Reconstruction era.
