What is the intercept of the security market line (SML)?

Multiple choice question.

The market rate of return

The market-risk premium

Beta

The risk-free rate

1 answer

The intercept of the security market line (SML) is the risk-free rate.

The SML represents the relationship between the expected return of a security and its systematic risk (beta), and its y-intercept is the risk-free rate of return.

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