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

Question

Quizplus · Accepted Answer

The intercept point of the security market line represents the expected return of a risk-free asset, which is independent of market risk. Therefore, it corresponds to the risk-free rate of return.

The Intercept Point of the Security Market Line Is the Rate