The security market line is defined as a positively sloped straight line that displays the relationship between the:
A)beta and standard deviation of a portfolio.
B)systematic and unsystematic risks of a security.
C)nominal and real rates of return.
D)expected return and beta of either a security or a portfolio.
E)risk premium and beta of a portfolio.

Question

Quizplus · Accepted Answer

The security market line (SML) represents the expected return of a security or portfolio as a function of its beta, which measures systematic risk. It is a graphical representation of the Capital Asset Pricing Model (CAPM).

The Security Market Line Is Defined as a Positively Sloped