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 <span> a slower metabolic rate.
Metabolic rate determine how much you burn your food into energy. If a person has a high metabolic rate, the burning process happens so fast which make that person more explosive and hard to gained weight.
Slower metabolic rate means that a large portion of that food will be stored as fat for future use, which make that person hard to lose weight.</span>
Direct democracy. the kind of government is called direct democracy.<span />
The "near abroad" is the way the Russian politicians refer to the countries that gained independence after the collapse of the Soviet Union; such as Latvia and Ukraine.
They all have a Russian minority (of the Russians who emigrated there when it was a Soviet Republic) and the Citizens of those countries often speak Russian as a foreign or native language.
Also, they often have close ties to Russia, such as trade ties due to both the geographical proximity and to the infrastructure which was established while they were a part of the Soviet Union
Answer:
uk government and there oaw
