Q702
An individual stock required return is equal to risk free rate plus bearing risk premium is an explanation of
A.
security market line
AnswerB.
capital market line
C.
aggregate market line
D.
beta market line
Answer: Option A
Solution
Answer: Option A
Solution:
An individual stock required return is equal to risk free rate plus bearing risk premium is an explanation of security market line. The security market line (SML) is a line drawn on a chart that serves as a graphical representation of the capital asset pricing model (CAPM), which shows different levels of systematic, or market, risk of various marketable securities plotted against the expected return of the entire market at a given point in time.