The required risk premium for any given investment is defined by the security market line.

Question

Quizplus · Accepted Answer

The security market line (SML) shows the relationship between expected return and systematic risk for individual securities, portfolios, or the market as a whole. The required risk premium for any given investment is determined by its position on the SML, which is a graphical representation of the capital asset pricing model (CAPM). Therefore, the statement "The required risk premium for any given investment is defined by the security market line" is true.

The Required Risk Premium for Any Given Investment Is Defined