What Will Happen to the Security Market Line (SML)if the Following

question 66

Multiple Choice

What will happen to the security market line (SML) if the following events occur,other things constant: (1) inflation expectations increase,and (2) investors become more risk averse?

• A) Shift up and keep the same slope
• B) Shift up and have less slope
• C) Shift up and have a steeper slope
• D) Shift down and keep the same slope
• E) Shift down and have less slope

---

Definitions:

Perpetual Inventory System

An inventory management system where stock levels are updated in real-time following each purchase or sale.

Inventory Account

An account used to record the value of inventory held by a business, including goods ready for sale and those in the process of being produced.

Subsidiary Inventory Ledger

The subsidiary ledger containing individual accounts for items of inventory.

Safeguarding Inventory

Measures and controls implemented by a company to protect its inventory from theft, damage, and mismanagement.