Other Things Held Constant,if the Expected Inflation Rate Decreases and Investors

question 124

Multiple Choice

Other things held constant,if the expected inflation rate decreases and investors also become more risk averse,the Security Market Line would be affected as follows:

• A) The y-axis intercept would decline,and the slope would increase.
• B) The x-axis intercept would decline,and the slope would increase.
• C) The y-axis intercept would increase,and the slope would decline.
• D) The SML would be affected only if betas changed.
• E) Both the y-axis intercept and the slope would increase,leading to higher required returns.

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Definitions:

Relative Deprivation

A feeling of dissatisfaction experienced by individuals who perceive themselves as worse off compared to others.

Berkowitz

Leonard Berkowitz is a social psychologist known for his research on aggression, including the development of the Cognitive Neoassociation Model of aggressive behavior.

Ethnocentrism

Evaluative preference for all aspects of our own group relative to other groups.

Longitudinal Study

Research that follows the same subjects over a period of time to observe changes or developments.