Other things held constant, if the investors become less risk averse, the new security market line (SML) would _____.
A) not be affected
B) shift down
C) shift up
D) have a steeper slope
E) have a less steep slope

Question

Quizplus · Accepted Answer

If investors become less risk averse, they require a lower risk premium for taking on additional risk, which results in a less steep slope of the Security Market Line (SML).

Other Things Held Constant, If the Investors Become Less Risk