A Decrease in the Market Risk Premium,all Other Things Constant,will

question 31

Multiple Choice

A decrease in the market risk premium,all other things constant,will cause the security market line to

• A) Shift up
• B) Shift down
• C) Have a steeper slope
• D) Have a flatter slope
• E) Remain unchanged

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Definitions:

Molding Machine

A machine used in manufacturing to shape liquid or pliable material using a rigid frame called a mold or matrix.

Straight-line Rate

A method of calculating depreciation by evenly allocating the cost of an asset over its useful life.

Double Declining-balance

An accelerated method of depreciation where the book value of an asset is reduced at double the rate of its straight-line depreciation.

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been subtracted from total revenues.