Which of the Following Statements About the Security Market Line

question 106

Multiple Choice

Which of the following statements about the Security Market Line are correct?
I. The intercept point is the risk-free rate of return.
II. The slope of the line is beta.
III. An investor should accept any return located above the SML line.
IV. A beta of 1.0 indicates the risk-free rate of return.

• A) I and II only
• B) III and IV only
• C) II, III and IV only
• D) I, III and IV only

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Definitions:

Quantity

The measurement or amount of something, numerically represented, indicating how much or how many are present or required.

Specification

A detailed description of the requirements, dimensions, materials, or standards used to describe a product, material, or system.

Master Schedule

A detailed plan that outlines the anticipated production activities of a company, indicating what is to be produced, in what quantity, and when.

Not to Be Rescheduled

An event or activity that has been decided upon not to change its planned time or date.