The graphical representation of the Capital Asset Pricing Model outlining the linear relationship between systematic risk and the expected return of an asset is shown by:
A) covariance.
B) beta.
C) the market risk premium.
D) the reward-to-risk ratio.
E) the security market line.

Question

Quizplus · Accepted Answer

The graphical representation of the Capital Asset Pricing Model is known as the security market line, which shows the linear relationship between systematic risk (measured by beta) and the expected return of an asset. The other options do not represent the CAPM graphically.

The Graphical Representation of the Capital Asset Pricing Model Outlining