The Y-Axis Intercept of the SML Represents the Required Return

question 60

True/False

The Y-axis intercept of the SML represents the required return of a portfolio with a beta of zero, which is the risk-free rate.

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Definitions:

Initial Investments

The upfront capital put into a project or business to get it started.

Income Taxes

Taxes imposed by the government on individuals or entities based on their net income or profit.

After-Tax Discount Rate

This refers to the rate of return on an investment after accounting for taxes, used in capital budgeting to assess the value of future cash flows.

Income Tax Rate

The proportion of an entity's or person's income that is subject to taxation.