Use the Following Three Statements to Answer This Question

question 94

Multiple Choice

Use the following three statements to answer this question:
I.The capital market line (CML) depicts the highest attainable expected return for any given risk level that includes only efficient portfolios.
II.The security market line (SML) depicts the required rate of return for any given risk level that includes only individual securities.
III.The Security Market Line (SML) measures the price of systematic risk.

• A)I, II and III are correct.
• B)I, II and III are incorrect.
• C)I and III are correct, II is incorrect.
• D)I is incorrect, II and III are correct.

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Definitions:

Simultaneous Change

The occurrence of two or more changes at the same time, often within the same system or process.

Causation

Cause-and-effect linkage between two factors, where one of them causes the other to occur or change.

Cause-and-effect

A relationship where one event (the cause) makes another event happen (the effect).

Quoting

The act of repeating or copying the exact words from another source, typically with acknowledgment of that source.