The characteristic line is graphically depicted as:
A)the plot of the beta against the market index returns.
B)the plot of the security returns against the market index returns.
C)the plot of the returns of the security against the beta.
D)the plot of the relationship between beta and expected return.
E)None of the above.

Question

Quizplus · Accepted Answer

The characteristic line is a graphical representation of the relationship between the security returns and market index returns. Therefore, the best choice is B, which represents the plot of the security returns against the market index returns.

The Characteristic Line Is Graphically Depicted As