CFA Practice Question
An increase in the systematic risk of a security
A. would move the security lower on the security market line.
B. would move the security higher along the security market line.
C. would increase the slope of the security market line.
Explanation: A change in the systematic risk of a security leads to a movement along the security market line. In this case the required rate of return would be higher.
User Contributed Comments 1
| User | Comment |
|---|---|
| danlan | Increase in the systematic risk: increase of beta. C means increase of market premium |