The Security Market line (SML) shows how the average expected rates of return on assets vary with:

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The Security Market line (SML) demonstrates the expected return on an asset based on its level of risk as measured by the asset's beta. The SML is a graphical representation of the Capital Asset Pricing Model (CAPM) which explains the relationship between the expected return and the level of risk. As such, the average expected rates of return on assets vary with risk level, not stock price, dividend payment or time preference.

The Security Market Line (SML) Shows How the Average Expected