The Intercept Point of the Security Market Line Is the Rate

question 19

Multiple Choice

The intercept point of the security market line is the rate of return that corresponds to

• A)the market rate of return.
• B)the beta of the market.
• C)a value of one.
• D)a value of zero.
• E)the risk-free rate.

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Definitions:

Creative Destruction

A concept in economics introduced by Joseph Schumpeter, where innovation leads to old technologies or products being replaced by new and more efficient ones, driving economic growth.

Derived Demand

The demand for a resource that depends on the demand for the products it helps to produce.

Distribution Of Income

The way in which total income is shared among different individuals or groups in an economy.

Market System

Here, economic decisions about where to invest, what and how much to produce, and how to distribute goods are made based on supply and demand curves, with pricing for these goods and services being freely adjusted in a market-based pricing structure.