The security market line (SML)
A)can be portrayed graphically as the expected return-beta relationship.
B)can be portrayed graphically as the expected return-standard deviation of market returns relationship.
C)provides a benchmark for evaluation of investment performance.
D)A and C.
E)B and C.

Question

Quizplus · Accepted Answer

The security market line (SML) is a graphical representation of the expected return-beta relationship, which provides a benchmark for evaluation of investment performance. Therefore, both options A and C are correct, making D the best choice. Option B is incorrect because the expected return-standard deviation of market returns relationship is portrayed graphically using the efficient frontier, not the SML.

The Security Market Line (SML)