If we examine the security market line,we see that the market risk premium is the risk-free rate minus the expected return on the market portfolio.

Question

Quizplus · Accepted Answer

The security market line shows the expected return for a given level of systematic risk (beta). The market risk premium is equal to the expected return on the market portfolio minus the risk-free rate. Therefore, the statement is incorrect.

If We Examine the Security Market Line,we See That the Market