The SML approach generally assumes that the reward-to-risk ratio is constant.

Name: The SML approach generally assumes that the reward-to-risk ratio is constant.
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The Security Market Line (SML) approach, which is part of the Capital Asset Pricing Model (CAPM), assumes that the reward-to-risk ratio is constant across all assets when they are correctly priced, as it plots expected returns of assets against their beta (systematic risk) with the market.

The SML Approach Generally Assumes That the Reward-To-Risk Ratio Is