Which one of the following is a positively sloped linear function that is created when expected returns are graphed against security betas?
A)reward-to-risk matrix
B)portfolio weight graph
C)normal distribution
D)security market line
E)market real returns

Question

Quizplus · Accepted Answer

The positively sloped linear function that is created when expected returns are graphed against security betas is known as the Security Market Line (SML). The SML is a graphical representation of the capital asset pricing model (CAPM), which shows the expected return of an asset given its beta or systematic risk. The slope of the SML represents the market's risk premium, and it indicates the excess return that investors require for taking on additional risk beyond the risk-free rate.

Which One of the Following Is a Positively Sloped Linear