Which of These Represents the Line Drawn Between the Point

question 31

Multiple Choice

Which of these represents the line drawn between the point of tangency of the efficient frontier and the risk free rate?

• A)The capital market line
• B)The equity return line
• C)The equity market line
• D)The security market line

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Definitions:

Paid-in Capital

Funds received by a company from investors in exchange for stock, representing the capital that stockholders have invested in the company.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company’s profits through dividends.

Par Value

The nominal value of a bond, stock, or other security, as stated by the issuer upon issuance.

Discount

A reduction applied to the usual cost of goods, services, or invoices, often to encourage prompt payment or increase sales.