Intro

The standard expected return-beta version of CAPM is a straignt line in x-y plane.

E(Ri)=Rf+i[E(RM)Rf]E(Ri)=Rf+i[E(RM)-Rf]

Attempt 1/2 for 10 pts.

Part 1

Which of the following are CORRECT about the straight line?

Check all that apply:

ii is the slope

expected market return is the intercept

(ii, E(Ri)E(Ri)) is a point on the straight line

intercept point is (0, RfRf)

E(RM)RfE(RM)-Rf is the slope

slope equals market risk premium

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