The Security Market Line (SML)relates Risk to Return, for a Given

question 160

Multiple Choice

The Security Market Line (SML) relates risk to return, for a given set of market conditions. If the risk-free rate increases, which of the following would most likely occur?

• A)The market risk premium would increase.
• B)Beta would increase.
• C)The slope of the SML would increase.
• D)The SML line would shift up.

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