The Y-Axis Intercept of the SML Indicates the Return on the Individual

question 55

True/False

The Y-axis intercept of the SML indicates the return on the individual asset when the realized return on an average stock (beta = 1.0) is zero.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually do pay.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded by consumers, typically downward sloping.

Adverse Selection

A situation in insurance and markets where buyers and sellers have different information, leading to transactions where the seller is more likely to sell a low-quality product.

Insurance

A financial product offering protection against a loss, providing compensation in the event of specific financial damages or risks occurring.