A project should be accepted if its return plots above the security market line.

Question

Quizplus · Accepted Answer

The security market line provides a benchmark rate of return that takes into account the market risk of an investment. If a project's expected return plots above the security market line, it means that the project is expected to generate a return that is higher than what can be achieved by investing in the market, adjusted for risk. Therefore, accepting the project would make sense.

A Project Should Be Accepted If Its Return Plots Above