Answer:
I think like the super continent pangea or something like that
florida was under water tho
Explanation:
The answer to ypur question is to give credit to the creator and/or ask permission.
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.
Learn more about Security Market Line (SML) on:
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Potential Energy or Kinetic
Answer:
B. The government could reduce corporate tax rates for service and retail companies.
Explanation:
The accumulation of technological capital and knowledge are considered factors that generate increase in the productivity of firms and the economy as a whole. Thus, all policies that encourage the training of labor, as well as the technological development of firms are considered policies conducive to economic growth. Scholarships, patent incentives, and research support fit this type of incentive. However, the mere reduction of fees charged by firms cannot be considered an incentive policy from the perspective of growth theory that considers the accumulation of knowledge as the main aspect of development. Tax reduction is a simple tax policy aimed at increasing firms' competitiveness and increasing sales, but it is not associated with the process of scientific and technological development, as it does not involve the diffusion of knowledge.
