question archive The intercept of the security market line is the reward-to-risk ratio for taking on units of systematic risk
The intercept of the security market line is the reward-to-risk ratio for taking on units of systematic risk
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The intercept of the security market line is the reward-to-risk ratio for taking on units of systematic risk. Select one: O a. True b. False
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b. False:
The intercept of the SML is equal to the risk-free rate.
Assuming a linear relationship between risk and return, the assumption is that the y-intercept is the return on a risk-free investment (the risk free rate), and the slope is the premium on risk in terms of expected returns.
