If All Investors Become More Risk Averse, the SML Will

question 3

Multiple Choice

If all investors become more risk averse, the SML will ________ and stock prices will ________.

• A) shift upward; rise
• B) shift downward; fall
• C) have the same intercept with a steeper slope; fall
• D) have the same intercept with a flatter slope; rise

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Definitions:

Maslow Hierarchy

Maslow's Hierarchy is a psychological theory proposed by Abraham Maslow that categorizes human needs into a five-tier model, from basic physiological needs to self-actualization.

Self-actualization Needs

The highest level in Maslow's hierarchy of needs, representing the realization of one's potential, self-fulfillment, seeking personal growth and peak experiences.

Physiological Needs

Basic human requirements such as food, water, and shelter that must be met to ensure survival.