Which of the Following Is True About the Security

question 54

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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Definitions:

270 Ω

A specific measurement of electrical resistance valued at 270 ohms.

120 V

A reference to a standard voltage level used in homes and businesses in many parts of the North and Central America for powering electrical devices and lighting.

Resistor

A device used to introduce some amount of resistance into an electric circuit.

Resistance

The opposition to the flow of electric current, resulting in electrical energy being transformed into heat or another form of energy.