The linear relation between an asset's expected return and its beta coefficient is the:
A) Reward to risk ratio.
B) Portfolio weight.
C) Portfolio risk.
D) Security market line.
E) Market risk premium.

Question

Quizplus · Accepted Answer

The Security Market Line (SML) represents the linear relationship between an asset's expected return and its beta coefficient in the Capital Asset Pricing Model (CAPM). This line illustrates how much return an investor should expect for taking on additional risk.

The Linear Relation Between an Asset's Expected Return and Its