If All Securities Plot on the Security Market Line Then

question 253

Multiple Choice

If all securities plot on the security market line then:

• A) Each security is being paid the same amount of risk premium.
• B) The reward-to-risk ratio is constant and equal to the market risk premium.
• C) Every security has a reward-to-risk ratio equal to its beta.
• D) The slope of the security market line must be greater than the reward-to-risk ratio.
• E) The reward-to-risk ratio is constant and equal to 1.0.

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Definitions:

Semipermeable

Characteristic of a membrane that allows certain substances to pass through it while blocking others.

Depolarization

A decrease in the difference in electrical charge across a cell membrane, making the inside of the cell less negative compared to the outside.

Sodium Ions

Positively charged atoms (Na+) that play crucial roles in physiological processes, including nerve impulse transmission and muscle contraction.

Physiological Relaxation

A state in which the body is not in alert mode, often characterized by reduced tension and stress, and an increased feeling of calm.