The Security Market Line (SML)

question 6

Multiple Choice

The Security Market Line (SML) :

• A) shows the relationship between a stock return and the market return but ignores risk.
• B) shows the relationship between risk and return.
• C) uses the AAA corporate bond rate for a riskless rate of return.
• D) shows the market risk relative to the industry risk.

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Definitions:

Foreclosure

In developmental psychology, a state where an individual prematurely commits to values or goals without self-exploration.

Commitments

Obligations or pledges to do something, often requiring dedication and effort over time.

Alternatives

Different choices or options available in a situation, offering a variety of possibilities.

Suicides

The act of intentionally causing one's own death, often resulting from despair, mental health conditions, or perceived insurmountable problems.