Which of the Following Is True About the Security Market

question 94

Multiple Choice

Which of the following is true about the Security Market Line (SML) ? The SML:

• A) Expresses a relationship between expected returns and systematic (non-diversifiable) risk.
• B) Expresses the equilibrium relationship between expected returns and risk for all stocks.
• C) Expresses the long-run average return.
• D) Is a function of beta.
• E) All of the above are true.

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Definitions:

Subjective Approach

A method of decision-making or analysis based on personal feelings, tastes, or opinions rather than external facts or evidence.