Which of the Following Is the Best Definition of Security

question 219

Multiple Choice

Which of the following is the best definition of security market line (SML) ?

• A) A theory showing that the expected return on any risky asset is a linear combination of various factors.
• B) A risk that affects at most a small number of assets. Also called unique or asset-specific risks.
• C) A risk that influences a large number of assets. Also called market risk.
• D) Positively sloped straight line displaying the relationship between expected return and beta.
• E) Principle stating that spreading an investment across a number of assets eliminates some, but not all, of the risk.

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Definitions:

Strict Liability

A principle that holds parties accountable for damages irrespective of preventive measures or caution exercised.

Contributory Negligence

A legal principle where if a party can be shown to have contributed to their own injury or loss, they may be barred from recovering damages.

Smoke Alarms

Devices designed to detect smoke and emit an alarm, providing early warning of fire.

Negligence Action

A legal claim brought against someone who fails to act with the level of care that someone of ordinary prudence would have exercised under the same circumstances, resulting in harm or damage.