-has higher risk
In general, an asset with higher expected return _____.
-is more expensive
-is less expensive
-has lower risk
-has higher risk
-the reward for bearing risk
-normally positive for risky assets
-the difference between the expected rate of return on an asset and the risk-free rate
The risk premium is _____.
Check all that apply:
-the reward for bearing risk
-normally positive for risky assets
-normally zero for risky assets
-the difference between the expected rate of return on an asset and the risk-free rate
-An investor can increase their expected return by borrowing funds and investing more in risky assets (using leverage).
-The slope of the capital allocation line is called the Sharpe ratio.
Which of the following statements are true about the capital allocation line (CAL)?
Check all that apply:
-The CAL represents all portfolios with the same expected return but different standard deviations.
-An investor can increase their expected return b