If the Market Portfolio Has an Expected Return of 0

question 76

Multiple Choice

If the market portfolio has an expected return of 0.12 and a standard deviation of 0.40,and the risk-free rate is 0.04,what is the slope of the security market line?

• A) 0.08
• B) 0.20
• C) 0.04
• D) 0.12

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Definitions:

Type II Error

The error that occurs when a false null hypothesis is not rejected, also known as a false negative.

P Value

In hypothesis testing, the probability that the observed data (or a more extreme) would occur if the null hypothesis were true.

Hypothesized Reason

A proposed explanation based on limited evidence as a starting point for further investigation or experiment.

Significance

The degree to which a result, difference, or relationship in data is not likely to occur by random chance.