When Markets Are in Equilibrium,the CML Will Be Upward Sloping

question 59

Multiple Choice

When markets are in equilibrium,the CML will be upward sloping

• A)because it shows the optimum combination of risky securities.
• B)because the price of risk must always be positive.
• C)because it contains all securities weighted by their market values.
• D)because the CML indicates the required return for each portfolio risk level.

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Definitions:

Monopolistic Competition

Monopolistic competition is a market structure where many companies sell products that are similar but not identical, allowing for product differentiation and some degree of market power.

Marginal Benefit

The incremental advantage received by using one more unit of a good or service.

Monopolistic Competition

A market structure characterized by many firms offering differentiated products or services.

Long-Run Equilibrium

A state in which all firms in a market or industry are making normal profits, with no incentive for entry or exit, and all resources are optimally allocated.