The graphical representation of the CAPM (capital asset pricing model) is called the
A)capital market line.
B)characteristic line.
C)security market line. C
D)None of the options are correct.

Question

Quizplus · Accepted Answer

The CAPM is graphically represented as the security market line (SML), which shows the expected return of an individual security based on its riskiness as measured by beta. The SML represents the equilibrium between expected return and risk, where securities above the line are overvalued and those below are undervalued.

The Graphical Representation of the CAPM (Capital Asset Pricing Model)