How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Dr. Amit Your Own Question

Dr. Amit
Dr. Amit, Professional w/Adv. Degree
Category: Homework
Satisfied Customers: 1042
Experience:  MBBS, Technical Analyst, CFTE, Net Researcher, Assisted many with H.Work of various fields
12193477
Type Your Homework Question Here...
Dr. Amit is online now
A new question is answered every 9 seconds

10. (TCO C) Which of the following statements is CORRECT? (Points

This answer was rated:

10. (TCO C) Which of the following statements is CORRECT? (Points : 10)
The slope of the SML is determined by the value of beta.
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 its managers.
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 expect the observed relationship to continue on into the future.
If investors become less risk averse, the slope of the Security Market Line will increase.
If a company increases its use of debt, this is likely to cause the slope of its SML to increase, indicating a higher required return on the stock.
THIS ANSWER IS LOCKED!

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Dr. Amit and 4 other Homework Specialists are ready to help you