Quiz Ch 08 – Characteristics of the Security Market Line (SML)
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What does the Security Market Line (SML) graph represent?
What does the Security Market Line (SML) graph represent?
Which factors are incorporated in the Fama-French three-factor model?
What is the correlation coefficient between the risk-free asset and the efficient portfolio?
What is the correlation coefficient between Stock B and Stock A if the correlation coefficient between Stock A and Stock B is +0.6?
What is the covariance of Stock B with Stock A if the covariance of Stock A with Stock B is -100?
What is a frequently raised criticism of the Capital Asset Pricing Model (CAPM)?
According to the CAPM, what is the expected risk premium of a stock with a beta value of 1.7 if the market risk premium is 8 percent?
What is achieved by incorporating lending and borrowing at a risk-free rate with efficient portfolios?
In which scenario would one anticipate a stock with a beta of 1.25 to experience an increase in returns?
What rate of return would one anticipate for a stock with a beta of zero?