The intercept point of the security market line is the rate of return which corresponds to:
A)the risk-free rate of return.
B)the market rate of return.
C)a value of zero.
D)a value of 1.0.
E)the beta of the market.

Question

Quizplus · Accepted Answer

The intercept point of the security market line represents the expected return of an investment with zero systematic (market) risk. Therefore, it corresponds to the risk-free rate of return.

The Intercept Point of the Security Market Line Is the Rate