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:

Preferences

Individual tendencies or choices toward certain options over others, often based on values, beliefs, or personal tastes.

Z Problem-Solving Model

A decision-making framework that alternates between analytical and intuitive thinking strategies.

Nonpreferences

Choices or options that are less desirable or not preferred by an individual or group when making decisions.

Individual Development

The continuous process of personality, skill, and capacity enhancement over one's lifespan.