The intercept point of the security market line is the rate of return which corresponds to:
A) the risk-free rate.
B) the market rate.
C) a return of zero.
D) a return of 1.0 percent.
E) the market risk premium.

Question

Quizplus · Accepted Answer

The intercept point of the security market line represents the expected return on a risk-free asset with zero systematic risk. Therefore, it corresponds to the risk-free rate, which is the return an investor can earn on a completely risk-free asset.

The Intercept Point of the Security Market Line Is the Rate