Which of the Following Is True About the Security Market

question 45

Multiple Choice

Which of the following is true about the security market line (SML) derived from the APT?

• A) The SML has a downward slope.
• B) The SML for the APT shows expected return in relation to portfolio standard deviation.
• C) The SML for the APT has an intercept equal to the expected return on the market portfolio.
• D) The benchmark portfolio for the SML may be any well-diversified portfolio.
• E) The SML is not relevant for the APT.

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