The Security Market Line shows the positive relationship between the average expected rates of return and levels of diversifiable risk of financial assets.

Name: The Security Market Line shows the positive relationship between the average expected rates of return and levels of diversifiable risk of financial assets.
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Question

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The Security Market Line (SML) illustrates the relationship between the expected return of an asset and its systematic risk, measured by beta, not diversifiable risk.

The Security Market Line Shows the Positive Relationship Between the Average