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A Decrease in Investors' Risk Aversion Causes the Slope of the SML

question 21

True/False

A decrease in investors' risk aversion causes the slope of the SML to decline becoming more horizontal.


Definitions:

Exchange Rate

The price of one country's currency expressed in terms of another country's currency, facilitating international trade and finance.

Cross-Rate

The implicit exchange rate between two currencies (usually non-U.S.) quoted in some third currency (usually the U.S. dollar).

Exchange Rate

The worth of a certain currency depicted through the value of a different currency.

Foreign Currency Approach

A method in international finance that involves analyzing business or investment decisions based on their impact in foreign currency terms.

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