The SML Relates Risk to Return, for a Given Set

question 60

Multiple Choice

The SML relates risk to return, for a given set of market conditions.If risk aversion 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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Definitions:

Gonadotropic Hormones

Hormones that stimulate the activity of the gonads (testes and ovaries), including follicle-stimulating hormone (FSH) and luteinizing hormone (LH).

Ovaries

Female reproductive organs in which eggs (ova) are produced, along with the hormones estrogen and progesterone.

Estrogen

A group of hormones responsible for the development and regulation of the female reproductive system and secondary sexual characteristics.

Progesterone

A steroid hormone that plays a key role in the menstrual cycle, pregnancy, and embryogenesis of humans and other species.