What will happen to the security market line

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Reference no: EM132055166

1. What will happen to the security market line (SML) if the following events occur, other things constant: (1) inflation expectations decrease, and (2) investors become more risk averse?

a. Shift down and have a steeper slope

b. Shift up and have less slope

c. Shift up and have the same slope

d. Shift down and keep the same slopee.

e. All sources of funds have the same risk

2. A firm has 10 million shares oustanding before it declares a 2 for 5 reverse split. The number of shares outstanding after the split is:

a) 4 million

b) 2 million

c) 25 million

d) 10 million

e) 5 million

Reference no: EM132055166

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