Which of the Following Statements Is Correct

question 4

Multiple Choice

Which of the following statements is correct?

• A)The slope of the SML is determined by the value of beta.
• B)The SML shows the relationship between companies' required returns and their diversifiable risks. The slope and intercept of this line cannot be influenced by a firm's managers, but the position of the company on the line can be influenced by managers.
• C)Suppose you plotted the returns of a given stock against those of the market, and you found that the slope of the regression line was negative. The CAPM would indicate that the required rate of return on the stock should be less than the risk-free rate for a well-diversified investor, assuming investors in the market expect the observed relationship to continue on into the future.
• D)If investors become less risk averse, the slope of the SML will increase.

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Definitions:

Training Opportunities

Programs and courses available to individuals seeking to acquire new skills or improve existing ones for professional development.

Poverty Level

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country.

Income Tax Code

A set of laws and regulations that govern how individuals and entities are taxed on their earnings.

Labor Market

The labor market is the marketplace in which workers offer their labor for employment and employers seek to hire them, influenced by supply and demand dynamics.