Name the following equation: Rf + [Rm - Rf]Beta
Group of answer choices a. The Capital Market Line (CML). b. Security Market Line (SML) c. The Market Risk Premium. d. The Characteristic Line
b. Security Market Line
The equation represents security market line. It shows the expected rate of return of an individual security as a function of market risk.
Name the following equation: Rf + [Rm - Rf]Beta Group of answer choices a. The Capital...
What is "E(Rm) - Rf" called in the CAPM equation? Group of answer choices a. The Capital Market Line (CML). b. The stock's risk premium. c. The market's risk premium. d. The Characteristic Line.
When using 60 months of data to calculate beta, the name of the regression line is: Group of answer choices a. The Capital Market Line (CML). b. Security Market Line (SML) c. The Market Risk Premium. d. The Characteristic Line
In the following table, indicate whether each statement refers to the Capital Market Line (CML) or to the Security Market Line (SML). Capital Market Line (CML) Security Market Line (SML) Statement This line defines the linear relationship between the expected return on an efficient portfolio and its standard deviation The slope of this line, th risk. - TRP/OM, reflects the investors' aggregated, or market-level, expected premium for This line describes the return on an individual security as the sum of...
5. The Capital Market Line and the Security Market Line Aa Aa E In the following table, indicate whether each statement refers to the Capital Market Line (CML) or to the Security Market Line (SML). Capital Market Line (CML) Security Market Line (SML) Statement This line defines the linear relationship between the expected return on an efficient portfolio and its standard deviation. The slope of this line, TM - PRF) / OM, reflects the investors' aggregated, or market-level, expected premium...
5. The Capital Market Line and the Security Market Line In the following table, check whether each statement refers to the Capital Market Line (CML) or to the Security Market Line (SML). Statement Capital Market Line (CML) Security Market Line (SML) This line defines the linear relationship between the expected return on an efficient portfolio and its standard deviation. The slope of this line, (r̂Mr̂M – rRFrRF)/σMσM, reflects the investors’ aggregated, or market-level, expected premium for risk. This line describes...
According to the CAPM, which of the following sentences is incorrect? A. All securities' expected returns must lie on the capital market line (CML). B. All securities' expected returns must be on the security market line (SML). C. The slope of the security market line (SML) must be the market risk premium. D. The slope of the capital market line (CML) is the Sharpe Ratio of the market portfolio. E. A security's beta coefficient will be negative if its return...
If Risk free rate (Rf) = 7% market premium (Rm) = 13% Beta = 1.845 What will be Ke ? Please explain how you calculated with steps
The risk-free rate is 4.5%, the market risk premium = ( E(Rm) - Rf) is 10.1%, and the stock’s beta is 1.3. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.
Suppose that CAPM holds. Let Rf denote the risk free rate, E(RM) the expected return of the market portfolio, and sigmaMthe standard deviation of the market portfolio. Now consider some portfolio on the capital market line, with expected return E(R) and standard deviation sigma. What is the beta of this portfolio? Select one: 1. E(R)/sigma 2. sigmaM/sigma 3. sigma/sigmaM 4. E(RM)-Rf
For #1 I got 16.7. I have no clue how to do 2 or 3. 1. Roar Corp has a beta of 1.3. If the risk-free rate is 5% and the market risk premium is 9%, what is the expected return of Roar Corp? 2. Draw a capital market line (CML). 3. Draw a security market line (SML). Clearly mark the axes. Clearly mark the axes.