tylermdons
tylermdons
07.03.2020 • 
Mathematics

How would the Security Market Line be affected, other things held constant, if the expected inflation rate decreases and investors also become more risk averse?

a. The x-axis intercept would decline, and the slope would increase
b. The y-axis intercept would increase, and the slope would decline
c. The SML would be affected only if betas changed.
d. Both the y-axis intercept and the slope would increase, leading to higher required returns
e. The y-axis intercept would decline, and the slope would increase.

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