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Author Question: If the equation E(ri) = rf + (rf + E(rm) - rf i) is the linear equation for the Security Market ... (Read 234 times)

Mollykgkg

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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

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: B

Answer to Question 2

Answer: B


Mollykgkg

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Reply #2 on: Jul 10, 2018
Thank you :)


Expo

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Reply #3 on: Jul 10, 2018
Happy to help you


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