The Combination of the Efficient Set of Portfolios with a Riskless

question 11

Multiple Choice

The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in:

• A)the capital market line which shows that investors will only invest in the riskless asset.
• B)the capital market line which shows that investors will invest in a combination of the riskless asset and the tangency portfolio.
• C)the security market line which shows that all investors will invest in the riskless asset only.
• D)the security market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.
• E)the capital market line which shows that investors will invest at the vertical intercept point of that line.

---

Definitions:

Straight-Line Depreciation

An approach to apportion the value of a tangible asset across its productive years in uniform yearly sums.

Estimated Useful Life

The expected timeframe during which an asset is considered to be useful or productive for its intended purpose.

Depreciation Expense

The allocated portion of the cost of a tangible or physical asset that is written off as an expense over its useful life.

Revised Amounts

Adjusted figures in financial statements or budgets to reflect changes from previously reported or estimated numbers.