The Intercept of the Security Market Line at Any Point

question 188

Multiple Choice

The intercept of the Security Market Line at any point in time is determined primarily by

• A) the prime interest rate.
• B) Federal Reserve monetary policy.
• C) the average beta of the market.
• D) investor tolerance of risk.

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Definitions:

Collection Time

The average period it takes for a business to receive payments owed by its customers, reflecting on the efficiency of its credit policies and cash management.

T-bills Yield

The return on investment for Treasury bills, which are short-term government securities.

Disbursement Float

The time between when a payment is issued by a company and when the funds are actually withdrawn from the company's bank account.

Average Amount

The average amount is the sum of figures divided by the number of figures, used to find the central or typical value in a set of data.