Assume You Are Looking at a Graph Depicting the Security

Multiple Choice

Assume you are looking at a graph depicting the security market line. If the market risk premium increases, then the:

A) Market rate of return will plot at a lower point on the vertical axis.
B) Intercept point of the security market line will rise up the vertical axis.
C) Point depicting the market rate of return will shift to the right parallel to the horizontal axis.
D) Slope of the security market line will rise while the intercept point remains constant.
E) Slope of the security market line will rise as the intercept point rises up the vertical axis.