[Answered] If the equation E(ri) = rf + (rf + E(rm) - rf i) is the linear equation for the Security Market ...

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Mollykgkg

Hero Member
Posts: 529

on: Jul 10, 2018

If the equation E(ri) = rf + (rf + E(rm) - rf i) is the linear equation for the Security Market Line, what portion represents the market risk premium for a stock that does not have a beta of 1.0?

A) i
B) E(rm) - rf
C) rf
D) i E(rm) - rf

Question 2

The ________ is the intercept on the Security Market Line.

A) prime rate
B) risk-free rate
C) market rate of return
D) beta

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Expo

Sr. Member
Posts: 351

Reply #1 on: Jul 10, 2018

Answer to Question 1

Answer: B

Answer to Question 2

Answer: B

Mollykgkg

Hero Member
Posts: 529

Reply #2 on: Jul 10, 2018

Thank you

Expo

Sr. Member
Posts: 351

Reply #3 on: Jul 10, 2018

Happy to help you

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