According to the CAPM (capital asset pricing model),the security market line is a straight line.The intercept of this line should be equal to

Question

Quizplus · Accepted Answer

According to the CAPM, the intercept of the security market line represents the expected return of a risk-free asset, which is typically represented by the risk-free rate. Therefore, the correct answer is C, the risk-free rate. The other options, including zero (A), the expected risk premium on the market portfolio (B), and the expected return on the market portfolio (D), do not represent the intercept of the security market line according to the CAPM.

According to the CAPM (Capital Asset Pricing Model),the Security Market