Explain the relationship displayed on the graph based on a risk level of X. Use the other capital letters on the graph to identify: (a) the average expected return for a risk-free asset; (b) the average expected return for a market portfolio with a risk level of X; (c) the compensation for time preference for a risk-free asset; and (d) the risk premium for the market portfolio’s risk level of X.

This graph represents the security market line. The security market line displays the relationship between the expected rate of return and the risk level. As the graph shows, the expected rate of return increases as the risk level increases. (a) Y; (b) Z; (c) B; (d) A