Question

What does the upward-sloping line in the Security Market Line (SML) indicate?

a.

The risk-free rate

b.

The risk premium

c.

The risk-free asset

d.

The expected return

Answer: (b).The risk premium Explanation:The upward-sloping line in the Security Market Line (SML) indicates the risk premium, representing the relationship between systematic risk and return.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What does the upward-sloping line in the Security Market Line (SML) indicate?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the main advantage of the Arbitrage Pricing Theory Model?

Q. When considering debt investments in portfolio management, what important factor should investors pay attention to?

Q. What does default risk refer to in the context of debt instruments?

Q. How does interest-rate risk affect bond prices and debt funds in portfolio management?

Q. What is advisable when investing in longer-duration bonds in the context of interest-rate expectations?

Q. How did bond yields and NAVs of debt funds react when the RBI did not hike interest rates as expected?

Q. What is the lock-in period for the Public Provident Fund (PPF)?

Q. What is a key advantage of tax-free bonds?

Q. Why might investors consider moving higher up the risk ladder for fixed income investments?

Q. What is a potential drawback of Company Fixed Deposits and NCDs?

Q. What is one of the prime reasons for the historical popularity of bank Fixed Deposits (FDs)?

Q. What is the primary objective of Fixed Maturity Plans (FMPs)?

Q. How do Fixed Maturity Plans (FMPs) differ from traditional Fixed Deposits (FDs)?

Q. What is the tax treatment of Fixed Maturity Plans (FMPs)?

Q. Why are short-term debt funds considered a good option for stable and higher returns?

Q. What is a key consideration for investors in Fixed Maturity Plans (FMPs)?

Q. Why are returns in Fixed Maturity Plans (FMPs) considered indicative and not assured?

Q. What is a characteristic of Fixed Maturity Plans (FMPs) that makes them suitable for low-risk attractive yield investments?

Q. How do Fixed Maturity Plans (FMPs) compare to Fixed Deposits (FDs) in terms of returns?

Q. What tax advantage do Fixed Maturity Plans (FMPs) offer over Fixed Deposits (FDs)?

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!