Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) "Characteristic line" is another name for the Security Market Line.
• B) The characteristic line is the regression line that results from plotting the returns on a particular stock versus the returns on a stock from a different industry.
• C) The slope of the characteristic line is the stock's standard deviation.
• D) The distance of the plot points from the characteristic line is a measure of the stock's market risk.
• E) The distance of the plot points from the characteristic line is a measure of the stock's diversifiable risk.

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