Which of the following assumptions about the Security Market Line is NOT true?
A)There is a basic reward for waiting: the risk-free rate.
B)The greater the risk,the greater the expected return.
C)There is an inconsistent trade-off between risk and reward at all levels of risk.
D)All of the above statements are true.

Question

Quizplus · Accepted Answer

The statement "There is an inconsistent trade-off between risk and reward at all levels of risk" is not true. The Security Market Line indicates a consistent trade-off between risk and reward at all levels of risk, and the expected return increases with increased risk tolerance.

Which of the Following Assumptions About the Security Market Line