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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Answer:
The sponsor can file a discharge petition
Explanation:
A discharge petition withholds the committee from further consideration of a bill or resolution. It is a means of bringing a bill to the floor for consideration without any report from the committee.
The sponsor can file a discharge petition to keep the bill from being pigeonholed.
Pigeonhole means not to assign or hear debate on the bill.
Answer:
Huang He considered being a very dangerous river due to the adverse effects it causes during flood.
Explanation:
he Yellow River is known as the Huang He in China. It is the mother stream for all the Chinese individuals. Huang He River is the second longest in China after the Yangtze River. A progression of floods crushed China in 1887, 1931, and 1938. They were brought about by the flooding of Huang He River. These three floods murdered a huge number of individuals. They are viewed as the three deadliest floods in history and among the most damaging cataclysmic events at any point recorded. The most damaging of these floods happened in August 1931, leaving 80 million individuals destitute and those murdered by the flood extend from 850,000 to 4 million, naming it the deadliest cataclysmic event in written history.
Buddhism expanded throughout India mostly through trade because monasteries served as rest spots for travellers. Additionally, the link between trade and religion spread was aided by the royal patronage of Buddhism.
Buddhism and Christianity, monks or nuns offer prayers on behalf of the people rather than statues. Usually, the monastery becomes the centre of spirituality for the nearby hamlet or town.
Monasteries served as both major religious and commercial institutions. Numerous monasteries may be found along significant trade routes; as employers, they drew artisans and merchants and had strong ties to the local economies of cities.
In fact, several of Monasteries even had their own trade businesses in neighbouring cities. Numerous religious orders, such as the Cistercians, established a commitment to self-sufficiency and operated farms and workshops where artisans produced their goods and processed raw materials.
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Answer:
Agency for the Prohibition of Nuclear Weapons in Latin America and the Caribbean, Andean Community of Nation, and Asia-Pacific Economic Cooperation.
Explanation:
