The Security Market Line (SML) is upward-sloping, indicating that the:
A. Beta of an investment increases as its risk level increases
B. Average expected return on investments decreases as their risk level decreases
C. Average expected return on the risk-free asset increases as its beta increases
D. Average expected return of the market portfolio increases as its beta increases
B. Average expected return on investments decreases as their risk level decreases
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Abstraction can be thought of as
a. ignoring reality in order to build theory. b. omitting unimportant details in order to understand complex phenomena. c. creating absurdity in order to explain simplicity. d. assuming complexity when simplicity will do. e. stylizing reality rather than analyzing cause and effect.
Utility is:
A. a quantitative measure of consumers’ preferences. B. an objective measure of a person’s happiness. C. as difficult to measure as an individual's income level. D. a meaningful number measuring a consumer’s precise level of satisfaction.