Multiple Choice
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.
Correct Answer:

Verified
Correct Answer:
Verified
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