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:
matching hypothesis
Explanation:
Matching hypothesis -
It is the theory , where the people with similar quality , behaviour or thinking tries to be together , in term of the social desirability , is known as matching hypothesis .
According to this theory , people tries to select their partner considering their taste to be as similar as possible , so they both can have same or similar thinking for life .
From this theory , people evaluate their own value and make some realistic choices by characterizing the best potential partner , to establish the similar level of attraction and comfort .
Answer:Type A behavior pattern
Explanation:Type A behavior pattern is characterized by intense feeling of wanting to succeed ,being highly competitive , very impatient and get angry easily , always work with a rush to complete thing in time and feel like there is no time to waste. Their need and desperation for success may make them hostile towards their colleagues because they don't want anyone to get on their way.
Yes because you cannot establish credibility without a source that is experienced on the research topic. it would be like a janitor writing journals about brain surgery when he never went to school to get his doctorate degree and has no valid knowledge of the topic.
I believe they would be categorized as police other than that their own branch of law enforcement
