Unlike the capital market line, the security market line is unique for each investor.

Question

Quizplus · Accepted Answer

The security market line (SML) is the same for all investors, while the Capital Market Line (CML) varies based on an individual's risk tolerance and investment preferences. The SML represents the expected return of a security or portfolio as a function of its beta, which measures its sensitivity to market-wide risk. All investors hold securities that should plot on, or above, the SML.

Unlike the Capital Market Line, the Security Market Line Is