The riskiness of a future cash flow is measured by ________,and these are all components of the SML.

Question

Quizplus · Accepted Answer

The riskiness of a future cash flow is measured by the Security Market Line (SML), which includes beta (a measure of a stock's volatility in relation to the market), the market risk premium (the additional return expected from holding a risky market portfolio instead of risk-free assets), and the risk-free rate (the theoretical rate of return of an investment with zero risk). These components are used to determine the expected return of a security given its risk.

The Riskiness of a Future Cash Flow Is Measured by ________,And