According to the CAPM (capital asset pricing model),the security market line is a straight line.The slope of this line should be equal to

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Quizplus · Accepted Answer

According to the CAPM, the security market line represents the relationship between the expected return and the risk of a security. The slope of this line measures the market risk premium, which is the additional return investors require to invest in the market portfolio instead of a risk-free investment. Therefore, the slope of the security market line should be equal to the expected risk premium on the market portfolio, which is choice B.

According to the CAPM (Capital Asset Pricing Model),the Security Market