Which of the Following Is Least Likely to Move a Firm's

question 6

Multiple Choice

Which of the following is least likely to move a firm's position to the right on the Security Market Line (SML) ?

• A) an increase in the firm's beta
• B) adding more financial debt to the firm's balance sheet relative to equity
• C) changing the business strategy to include new product lines with more volatile expected cash flows
• D) Investors perceive the stock as being riskier.
• E) an increase in the risk-free required rate of return

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Definitions:

Metabolic Pathway

A series of chemical reactions occurring within a cell that leads to the conversion of one substance into another, often resulting in the production of energy or cellular components.

Reactant

A substance that takes part in and undergoes change during a reaction in a chemical process.

Entropy

Measure of disorder or randomness in a system.

Cell

The smallest unit of life that displays all the properties of life; composed of cytoplasm surrounded by a plasma membrane.