The SML represents a:
A)condition of a volatile market.
B)stable market condition.
C)condition of stable equilibrium.
D)shift in market conditions.

Question

Quizplus · Accepted Answer

SML stands for Security Market Line which is a graphical representation of the expected return of a stock in relation to its risk. The line represents the equilibrium point between the expected return and risk of a stock in a stable market condition. Therefore, the correct answer is option C - condition of stable equilibrium.

The SML Represents A