In the results of the earliest estimations of the security market line by Lintner (1965)and by Miller and Scholes (1972),it was found that the average difference between a stock's return and the risk-free rate was ________ to its nonsystematic risk.
A)positively related
B)negatively related
C)unrelated
D)related in a nonlinear fashion
E)none of the above

Question

Quizplus · Accepted Answer

The average difference between a stock's return and the risk-free rate was positively related to its nonsystematic risk.

In the Results of the Earliest Estimations of the Security