The security characteristic line (SCL)
A) plots the excess return on a security as a function of the excess return on the market.
B) allows one to estimate the beta of the security.
C) allows one to estimate the alpha of the security.
D) All of the options.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The Security Characteristic Line (SCL) plots the excess return on a security as a function of the excess return on the market, which allows for the estimation of both the beta (the slope of the line) and the alpha (the intercept of the line) of the security.