A decrease in the expected real growth in the economy,all other things constant,will cause the security market line to
A) Shift up
B) Shift down
C) Have a steeper slope
D) Have a flatter slope
E) Remain unchanged

Question

Quizplus · Accepted Answer

A decrease in the expected real growth in the economy will result in a decrease in the expected return on stocks. This will cause the security market line to shift down, indicating a lower expected return for a given level of risk.

A Decrease in the Expected Real Growth in the Economy,all