The Security Market Line Plots the Expected Return on ______________

question 45

Multiple Choice

The security market line plots the expected return on ______________ against its ______________.

• A)a portfolio,standard deviation
• B)a portfolio,systematic risk
• C)an individual asset,standard deviation
• D)an individual asset,systematic risk

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price, often expressed as a percentage.

Risk-Free Interest Rate

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government securities.

Futures Price

The predetermined price at which a futures contract is agreed upon to buy or sell an asset at a future date.

Short Hedge

A risk management strategy used to offset potential losses in investments by taking an opposite position in related assets or derivatives.