The characteristic line graphically depicts the relationship between the:
A)beta of a security and the return on the security.
B)arithmetic average beta of the securities in a portfolio and the weighted average beta of those securities.
C)return on a security and the return on the market.
D)beta of a security and the return on the market.
E)beta of a security and the corresponding beta of the market.

Question

Quizplus · Accepted Answer

The characteristic line graphically depicts the relationship between the return on a security and the return on the market. This line is a regression line that shows how the returns on the security respond to changes in the market return, typically used in the Capital Asset Pricing Model (CAPM) to assess a security's risk relative to the market.

The Characteristic Line Graphically Depicts the Relationship Between The