Portfolio Management - Portfolio Management Section 1
56. The security market line’s intercept on the y-axis is most likely to be:
58. Correctly priced individual securities are most likely to plot on which of the following lines?
- Option : C
- Explanation : Correctly priced securities will plot on the SML. Overpriced securities will plot below the SML
59. Under CAPM, the market portfolio should ideally consist of all:
- Option : B
- Explanation : Theoretically, the market portfolio includes all risky assets. However, not all assets are tradable, and not all tradable assets are investable.
- Option : A
- Explanation : The CAPM shows that the primary determinant of expected return for an individual’s asset is its beta, or how well the asset correlates with the market.
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