One variable that the security market line approach depends on to estimate the expected return on a risky asset is the Marginal tax rate.

Question

Quizplus · Accepted Answer

The Security Market Line (SML) approach depends on the risk-free rate, the expected market return, and the asset's beta (its volatility in relation to the market) to estimate the expected return on a risky asset, not the marginal tax rate.

One Variable That the Security Market Line Approach Depends on to Estimate