Which of the Following Statements Is CORRECT

Which of the following statements is CORRECT?

A) the characteristic line is the regression line that results from plotting the returns on a particular stock versus the returns on a stock from a different industry.
B) the slope of the characteristic line is the stock's standard deviation.
C) the distance of the plot points from the characteristic line is a measure of the stock's market risk.
D) the distance of the plot points from the characteristic line is a measure of the stock's diversifiable risk.
E) "characteristic line" is another name for the security market line.

Correct Answer:

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