In equilibrium, the marginal price of risk for a risky security must be
A)equal to the marginal price of risk for the market portfolio.
B)greater than the marginal price of risk for the market portfolio.
C)less than the marginal price of risk for the market portfolio.
D)adjusted by its degree of nonsystematic risk.
E)None of the options is true.

Question

Quizplus · Accepted Answer

In equilibrium, the marginal price of risk for a risky security must be equal to the marginal price of risk for the market.If not, investors will buy or sell the security until they are equal.

In Equilibrium, the Marginal Price of Risk for a Risky