1. When we consider the "risk-free" rate of return, which of the following risks are still present?
1) There is no risk associated with a "risk-free" rate.
2) Loss of purchasing power due to inflation
3) Risk of a lower than anticipated nominal rate of interest
4) Risk of default on the debt or investment
2. The equation that is represented graphically by the security market line is called the:
A. capital market function.
B. portfolio diversification model.
C. bell curve.
D. market risk model.
E. capital asset pricing model.