The Security Market Line (SML)relates Risk to Return, for a Given

question 160

Multiple Choice

The Security Market Line (SML) relates risk to return, for a given set of market conditions. If the risk-free rate increases, which of the following would most likely occur?

• A)The market risk premium would increase.
• B)Beta would increase.
• C)The slope of the SML would increase.
• D)The SML line would shift up.

---

Definitions:

Neutral

Impartial or unbiased, not supporting either side in a conflict, competition, or disagreement.

Videoconferences

Virtual meetings where participants interact through video and audio connections, often using specialized software or platforms.

Business Communication

The dissemination of information within and outside a company, using various channels, aimed at promoting products, services, and organizational goals.

Overview

A brief summary or general survey of a topic, presenting the essential features or aspects.