Both Assets a and B Plot on the SML

question 16

Multiple Choice

Both assets A and B plot on the SML.Asset A has an expected return of 17% and a beta of 1.6.Asset B has an expected return of 11% and a beta of 1.0.What is the slope of the security market line?

• A)5.0%
• B)6.5%
• C)10.0%
• D)Cannot be determined from this information

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Definitions:

Cube Root

The number that produces a given number when cubed. It is the value that, when multiplied by itself three times, gives the original number.

Six-figure Accuracy

Refers to a level of precision in numerical calculations or measurements that includes six digits.

Pair Of Equations

Two equations that are solved together to find a common solution.

Six-figure Accuracy

A level of precision where a numerical value is accurate to six digits.