What Will Happen to the Security Market Line (SML) If

question 12

Multiple Choice

What will happen to the security market line (SML) if the following events occur, other things constant: (1) inflation expectations increase, and (2) investors become more risk averse?

• A) shift up and keep the same slope
• B) shift up and have less slope
• C) shift up and have a steeper slope
• D) shift down and keep the same slope
• E) shift down and have less slope

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Definitions:

Stingy

Reluctant to spend or give; showing a lack of generosity.

Avoidant Personality Disorder

A mental health condition characterized by a long-standing pattern of extreme sensitivity to rejection, social inhibition, and feelings of inadequacy.

Dysfunctional Beliefs

Negative and incorrect beliefs that are rigid, extreme, and not based on reality, often contributing to psychological distress.

Obsessive-Compulsive Personality Disorder

A personality disorder characterized by a pervasive pattern of preoccupation with orderliness, perfectionism, and control.