Which of the following statements about the difference between the SML and the CML is false? A) The intercept of both the CML and the SML is R_F. B) The CML prices efficient portfolios, while the SML prices both portfolios and individual securities. C) The CML and the SML are both assumed to be upward sloping. D) The CML and the SML measure everything the same except they were derived by different theorists.

Question

Quizplus · Accepted Answer

The key difference between the Security Market Line (SML) and the Capital Market Line (CML) lies in what they measure and how they are used, not in their derivation by different theorists. The SML is used to evaluate the expected returns of assets or portfolios considering their risk (beta), while the CML is specifically used to evaluate the efficient portfolios based on the market portfolio's risk and return.

Which of the Following Statements About the Difference Between the SML