A Reduction in the Willingness of Investors to Take on Risk

question 36

Multiple Choice

A reduction in the willingness of investors to take on risk would have what effect on the Security Market Line?

• A) no effect
• B) rotate the SML counter clockwise around the risk-free rate
• C) rotate the SML clockwise around the risk-free rate
• D) shift the SML upward, parallel to its previous location

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Definitions:

Forget

The inability to retrieve information or memories from one's memory.

Effective Listening

The skill of fully focusing on and understanding the speaker's message, involving both hearing and interpreting the information.

Empathetic Listening

The skill of understanding and sharing the feelings of another person by fully concentrating on their words and emotional expressions.

Clarifying

The process of making a statement or situation less confused and more comprehensible.