The intercept point of the security market line is the rate of return that corresponds to
A)the market rate of return.
B)the beta of the market.
C)a value of one.
D)a value of zero.
E)the risk-free rate.

Question

Quizplus · Accepted Answer

The intercept point of the security market line represents the rate of return that an investor would expect to earn for investing in a risk-free asset such as U.S. Treasury bond. Therefore, the intercept point corresponds to the risk-free rate.

The Intercept Point of the Security Market Line Is the Rate