The Steeper the Security Market Line

question 157

Multiple Choice

The steeper the Security Market Line,

• A) the lower the risk premium.
• B) the more investors dislike risk.
• C) the less investors are concerned about risk.
• D) the greater the risk-free interest rate.

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Definitions:

Normal Good

A product or service for which demand increases as consumer income increases, and vice versa, demonstrating a direct relationship between income and demand.

Income

The financial gain earned by an individual or entity, typically through wages, investments, or other forms of revenue.

Demand

The desire to own goods or services combined with the ability and willingness to pay for them.

Demand Curve

A curve on a graph that exhibits the quantity of a good that consumers are prepared to buy at different prices.