CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Which of the following statements concerning the Security Market Line (SML) is incorrect?
A. A movement along the SML is caused by a change in the risk characteristics of an investment.
B. A change in the market risk premium implies a change in the slope of the security market line.
C. A shift in the security market line will affect only an individual security.
Explanation: A shift in the security market line will affect the risk-return trade-off for all of the securities and portfolios portrayed on it.

A change in the slope of the SML occurs in response to a change in the attitudes of investors towards risk.

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