The Security Characteristic Line (SCL) Associated with the Single-Index Model

question 62

Multiple Choice

The security characteristic line (SCL) associated with the single-index model is a plot of

• A) the security's returns on the vertical axis and the market index's returns on the horizontal axis.
• B) the market index's returns on the vertical axis and the security's returns on the horizontal axis.
• C) the security's excess returns on the vertical axis and the market index's excess returns on the horizontal axis.
• D) the market index's excess returns on the vertical axis and the security's excess returns on the horizontal axis.
• E) the security's returns on the vertical axis and Beta on the horizontal axis.

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Definitions:

Foreign Exchange Gain

Profit arising from the appreciation of a foreign currency relative to the functional currency in foreign currency transactions.

Settlement Date

The date on which a trade or financial transaction must be completed, with the transfer of the asset and payment.

Year End

The end of a fiscal year or accounting period, at which time companies close books and prepare financial statements.

Exchange Loss

A financial loss resulting from foreign exchange rate fluctuations when converting foreign currency transactions into the domestic currency.