Which of the following statements about the Security Market Line are correct?
I.The intercept point is the market rate of return.
II.The slope of the line is beta.
III.An investor should accept any return located above the SML line.
IV.A beta of 0.0 indicates the risk-free rate of return.
A) I and II only
B) III and IV only
C) II, III and IV only
D) I, II, and IV only

Question

Quizplus · Accepted Answer

The Security Market Line (SML) represents the expected return of an asset at different levels of systematic risk (beta). An investor should accept returns above the SML as they offer higher returns for the same risk. A beta of 0.0 indicates the risk-free rate of return.

Which of the Following Statements About the Security Market Line