Which of the Following Statements About the Security Market Line

question 59

Multiple Choice

Which of the following statements about the Security Market Line are correct?
I. The intercept point is the risk-free rate of return.
II. The slope of the line is beta.
III. An investor should accept any return located above the SML line.
IV. A beta of 1.0 indicates the risk-free rate of return.

• A) I and III only
• B) III and IV only
• C) II, III and IV only
• D) I,II and III only

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Definitions:

Fixed Interval

A schedule of reinforcement where a response is rewarded only after a specified amount of time has elapsed.

Variable Interval

A schedule of reinforcement where a response is rewarded after a varying interval of time, making the timing of the reward unpredictable.

Variable-ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, leading to high and steady rates of response.

Fixed-ratio

A schedule of reinforcement where a response is rewarded only after a specified number of responses.