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  3. 2. the security market line is defined as the slo

2. The security market line is defined as The slope of a line relating...

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Finance

2. The security market line is defined as

  1. The slope of a line relating an individual securitys return to the returns of other securities in that firms primary industry
  2. A line that provides a picture of the risk return tradeoff required by diversified investors considering various risky assets.
  3. A line providing the slope or the beta of a security
  4. None of the answers provided are correct

3. All of the following are incorrect definitions of Beta except:

  1. A measure of volatility of a securitys returns relative to the returns of a broad-based market portfolio of securities.
  2. The ratio of the variance of market returns to the covariance of returns on a security with the market
  3. The inverse of the slope of the security regression line
  4. All of these answers are correct

4. A security with a beta value of 0.94 is a security that

  1. Has average systematic risk
  2. Has above-average systematic risk
  3. Has no unsystematic risk

d. Has below-average systematic risk

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