The security characteristic line (SCL)
A)plots the excess return on a security as a function of the excess return on the market.
B)allows one to estimate the beta of the security.
C)allows one to estimate the alpha of the security.
D)All of the options.

Question

Quizplus · Accepted Answer

The security characteristic line (SCL) plots the excess return on a security as a function of the excess return on the market, which allows one to estimate the beta of the security. Additionally, the SCL can also be used to estimate the alpha of the security. Therefore, all of the options (A, B, and C) are correct.

The Security Characteristic Line (SCL)