Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. The beta of the risk-free asset is: A. -1.0 B. 0.0 C. 0.5 D. 1.0 6. The difference between the return on the market

5. The beta of the risk-free asset is:

A. -1.0

B. 0.0

C. 0.5

D. 1.0

6. The difference between the return on the market portfolio and the risk-free rate is known as the:

A. total return.

B. systematic premium.

C. unsystematic return.

D. market risk premium.

7. According to the CAPM (capital asset pricing model), what is the single factor that explains differences in returns across securities?

A. the risk-free rate

B. the expected risk premium on the market portfolio

C. the beta of a security

D. the expected return on the market portfolio

8. Which of the following is on the horizontal axis of the Security Market Line?

a. Standard deviation

b. Beta

c. Expected return

d. Required return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advances In Financial Machine Learning

Authors: Marcos Lopez De Prado

1st Edition

1119482089, 978-1119482086

More Books

Students also viewed these Finance questions