A change in investors' feelings about risk will change the intercept (and therefore shift) the Security
Market Line.

Name: A change in investors' feelings about risk will change the intercept (and therefore shift) the Security Market Line.
Brand: Quizplus
Rating: 4.8 (34 reviews)

Question

Quizplus · Accepted Answer

The Security Market Line (SML) represents the expected return of a security as a function of its systematic risk (beta). A change in investors' feelings about risk affects the market risk premium, which changes the slope of the SML, not the intercept.

A Change in Investors' Feelings About Risk Will Change the Intercept