Which of the Following Is Least Likely to Move a Firm's

question 6

Multiple Choice

Which of the following is least likely to move a firm's position to the right on the Security Market Line (SML) ?

• A) an increase in the firm's beta
• B) adding more financial debt to the firm's balance sheet relative to equity
• C) changing the business strategy to include new product lines with more volatile expected cash flows
• D) Investors perceive the stock as being riskier.
• E) an increase in the risk-free required rate of return

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