Which of the Following Statements About the Difference Between the SML

question 7

Multiple Choice

Which of the following statements about the difference between the SML and the CML is true?

• A) The intercept of the CML is the origin, whereas the intercept of the SML is RF.
• B) The CML applies to efficient portfolios, whereas the SML applies to all portfolios or securities.
• C) The CML can be downward sloping, whereas that is impossible for the SML.
• D) The CML and the SML are essentially the same except for the price of risk.

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Definitions:

Confederacy

A federation of southern states that seceded from the United States from 1861 to 1865, leading to the American Civil War.

Paper Money

Currency made from paper that is officially issued by a government and circulated within its economy.

Wade-Davis Bill

Radical Republicans’ 1864 plan for Reconstruction that required loyalty oaths, abolition of slavery, repudiation of war debts, and denial of political rights to high-ranking Confederate officials; President Lincoln refused to sign the bill.

Loyalty Oath

An oath or pledge affirming one's allegiance to a state or nation, often required by governments of its employees or members of its military forces.