Other Things Held Constant,if the Expected Inflation Rate Decreases and Investors

question 124

Multiple Choice

Other things held constant,if the expected inflation rate decreases and investors also become more risk averse,the Security Market Line would be affected as follows:

• A) The y-axis intercept would decline,and the slope would increase.
• B) The x-axis intercept would decline,and the slope would increase.
• C) The y-axis intercept would increase,and the slope would decline.
• D) The SML would be affected only if betas changed.
• E) Both the y-axis intercept and the slope would increase,leading to higher required returns.

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Definitions:

Risk Factors

Characteristics or conditions that increase the likelihood of developing a disease or injury.

Sympathetic Nervous System

A part of the autonomic nervous system that activates what is often termed the fight or flight response, preparing the body for rapid action in threats.

Perspire

The process of sweating, or secretion of fluids by the sweat glands of the skin, often in response to heat or stress as a means of cooling the body.

Brain Imaging

Techniques that are used to capture images of the structure and function of the brain, aiding in diagnosis and research on neurological conditions.