The slope of the security market line is:
A) greater for high beta stocks.
B) generally downward sloping.
C) always the same.
D) the same as the market risk premium.
E) similar to the yield curve.

Question

Quizplus · Accepted Answer

The slope of the security market line (SML) represents the market risk premium, which is the difference between the expected return on the market portfolio and the risk-free rate. It is constant for all securities, regardless of their beta.

The Slope of the Security Market Line Is