Assume That the Security Market Line (SML)is Based on a Risk

question 17

Multiple Choice

Assume that the Security Market Line (SML) is based on a risk free rate of 5% and a market rate of 11%. What will happen to the SML if the forecast of inflation increases and investors become more risk averse?

• A)The SML will shift down and have a steeper slope
• B)The SML will shift up and have a less steep slope
• C)The SML will shift down and have the same slope
• D)The SML will shift down and have a less steep slope
• E)The SML will shift up and have a steeper slope

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Definitions:

Preoperative Medication

Medicines given to patients before surgical procedures to minimize pain, reduce the risk of infection, or ease anxiety.

Restroom

A facility equipped with toilets and sinks for public or private use.

Bladder Distention

The swelling or enlargement of the bladder, often due to the accumulation of urine.

Catheterization

Introduction of a catheter into a body cavity or organ to inject or remove fluid.