If all investors become more risk averse, the SML will ________ and stock prices will ________.

A) shift upward; rise
B) shift downward; fall
C) have the same intercept with a steeper slope; fall
D) have the same intercept with a flatter slope; rise

SML (Security Market Line)

A line in the Capital Asset Pricing Model that shows the relationship between the expected return of a security and its risk.

Risk Averse

A tendency to prefer certainty over uncertain outcomes to minimize exposure to financial loss.