The best fit line of a pairwise plot of the returns of the security against the market index returns is called the:
A)Security Market Line.
B)Capital Market Line.
C)characteristic line.
D)risk line.
E)None of the above.

Question

Quizplus · Accepted Answer

The best fit line of a pairwise plot of the returns of the security against the market index returns is called the characteristic line. The Security Market Line and Capital Market Line are different concepts that relate to the relationship between risk and return in the market. The risk line is not a recognized term in finance.

The Best Fit Line of a Pairwise Plot of the Returns