Use the Figure for the Question(s)below

question 47

Multiple Choice

Use the figure for the question(s) below.Consider the following graph of the security market line:
-Portfolio "D":

• A)falls below the SML.
• B)has a negative alpha.
• C)is overpriced.
• D)offers an expected return equal to the risk-free rate.

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Definitions:

y-Intercept

The point where a line crosses the y-axis in a graph, representing the value of the dependent variable when all independent variables are zero.

Slope

In a linear equation, the coefficient that represents the rate of change of the dependent variable with respect to the independent variable.

Regression Slope Coefficient

A parameter in regression analysis that represents the change in the dependent variable for a one-unit change in an independent variable.

Simple Linear Regression

A statistical method to model the relationship between two variables by fitting a linear equation to observed data.