An Increase in Investors' Aversion to Risk Causes the SML

question 113

True/False

An increase in investors' aversion to risk causes the SML to shift up parallel to the old SML.

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.

Operating Expenses

Costs related to the day-to-day functions of a business, excluding the cost of goods sold.

Net Income

The amount of money a company earns after all expenses, taxes, and costs have been subtracted from total revenue.

Periodic Inventory System

A method of inventory valuation in which updates to inventory levels and cost of goods sold are made periodically, such as at the end of the fiscal year.