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2. The security market line is defined as
- The slope of a line relating an individual securitys return to the returns of other securities in that firms primary industry
- A line that provides a picture of the risk return tradeoff required by diversified investors considering various risky assets.
- A line providing the slope or the beta of a security
- None of the answers provided are correct
3. All of the following are incorrect definitions of Beta except:
- A measure of volatility of a securitys returns relative to the returns of a broad-based market portfolio of securities.
- The ratio of the variance of market returns to the covariance of returns on a security with the market
- The inverse of the slope of the security regression line
- All of these answers are correct
4. A security with a beta value of 0.94 is a security that
- Has average systematic risk
- Has above-average systematic risk
- Has no unsystematic risk
d. Has below-average systematic risk
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