The characteristic line is graphically depicted as:
A) the plot of the relationship between beta and expected return.
B) the plot of the returns of the security against the beta.
C) the plot of the security against the market index returns.
D) the plot of the beta against the market index returns.

Question

Quizplus · Accepted Answer

The characteristic line is a regression line that plots the returns of a security against the returns of the market index, showing how the security's returns change in response to changes in the market index returns.

The Characteristic Line Is Graphically Depicted As