Answer:
In the goal to build up its military, Italy switches side/alliance in World War 2.
Explanation:
Previously, Italy had been members of the Triple Alliance with Germany and Austria-Hungary since 1882. However, this alliance was unpopular with large numbers of Italians and there was some doubt about Italy's military involvement in event of a war with members of the Triple Entente (Britain, France and, Russia). In World War 2, Italy joined the alliance contains the United Kingdom, USA, France and etc. This alliance was led by the USA which has a big military and a lot of weapons, that can help Italy to build up its military while the period of World War 2
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 correct answer to the assertion and reason is D. A is wrong but R is correct
<h3>What is an Assertion?</h3>
This refers to the statement that is meant to be proven by the use of a valid supporting detail.
Hence, we can see the given assertion that modern farming methods decrease the yield of production, there is a need to show a valid reason and this is not done, hence, we can conclude that option D is correct because A is wrong but R is correct.
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Limited authority and
local control.
