The Security Market Line (SML) Relates the Risks of Individual

question 74

Multiple Choice

The Security Market Line (SML) relates the risks of individual securities to their required rate of return. If investors conclude that the inflation rate is going to increase, which of the following change would occur?

• A)The market risk premium will increase.
• B)The beta of a stock will increase.
• C)The slope of the SML will become steeper.
• D)The standard deviation of a stock will increase.
• E)The required returns on all stocks will increase.

---

Definitions:

Formal Retreat Approach

A structured method of withdrawal from a situation, often used as a strategic decision-making process in business or conflict resolution contexts.

Informal Withdrawal Approach

A behavioral strategy wherein employees distance themselves from their work roles without officially leaving the organization, often through absenteeism or reduced effort.

Privacy Approach

Strategies or methodologies employed to protect individuals' personal information or data from unauthorized access.

Task Activities

Directly contribute to the performance of important tasks.