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