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:

Government Funded

Financial support provided by government agencies for projects, programs, or research, typically through grants or subsidies.

Private Sector

The part of a country's economic system that is run by individuals and companies, rather than by the government.

Private Organizations

Entities that operate independently of government control, often driven by private ownership or non-profit motives.

Medicare Coverage

A federal health insurance program in the United States for people aged 65 and older, as well as for some younger individuals with disabilities.