The Straight Line Passing Through the Risk-Free Rate of Return

question 17

Multiple Choice

The straight line passing through the risk-free rate of return on the vertical axis and the expected return-standard deviation point for the market portfolio is known as the:

• A)security market line.
• B)capital market line.
• C)characteristic line.
• D)efficient frontier.

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Definitions:

Sum

The result obtained by adding two or more numbers.

Scientific Notation

A way of expressing numbers that are too large or too small to be conveniently written in decimal form, using powers of ten.

Quadratic Polynomial

A polynomial of degree two, typically written in the form ax^2 + bx + c where a, b, and c are constants.

Cubic Polynomial

A polynomial of degree three, characterized by an equation of the form ax^3 + bx^2 + cx + d, where a, b, c, and d are constants and a ≠ 0.