Quiz Ch 08 – T/F SML Slope and Risk Aversion
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: SML slope is influenced by investor risk aversion; higher average aversion leads to steeper SML.
True or false: SML slope is influenced by investor risk aversion; higher average aversion leads to steeper SML.
True or false: The SML’s Y-intercept represents the risk-free rate, associated with a portfolio having a beta of zero.
True or false: Typically, the beta of an individual security tends to be more consistent over time compared to the beta of a diversified portfolio.
True or false: Variance functions as a gauge of returns’ variability. It is consistently larger than its square root, the standard deviation, as it involves squaring the deviations of actual returns from the expected return.
Which statement is correct regarding portfolio theory and the Capital Asset Pricing Model (CAPM)?
Which statement is correct regarding stock beta and required rates of return?
Assuming equilibrium, which statement is TRUE?