The Security Market Line Depicts the Graphical Relationship Between Which

question 37

Multiple Choice

The security market line depicts the graphical relationship between which two of the following?
I. expected return
II. surprise return
III. systematic risk
IV. unsystematic risk

• A) I and III
• B) I and IV
• C) II and III
• D) II and IV
• E) none of the above

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Definitions:

Canadian Security

A financial instrument issued in Canada, such as stocks, bonds, or options, that represents an investment in the Canadian market.

Denominated

Indicates the currency in which a financial transaction is specified or an investment is made.

Expected Return

The anticipated average return on an investment under normal conditions, taking into account both the probability of each outcome and the return of each outcome.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.