The security market line (SML) is the graph of:
A) Expected rate on investment (Y-axis) vs. variance of return
B) Expected return on investment vs. standard deviation of return
C) Expected rate of return on investment vs. beta
D) A and B

Question

Quizplus · Accepted Answer

The security market line (SML) is a graphical representation of the Capital Asset Pricing Model (CAPM). It plots the expected rate of return on an investment on the y-axis and the beta of that investment on the x-axis. Therefore, the correct choice is C, which represents the expected rate of return on investment vs. beta.

The Security Market Line (SML) Is the Graph Of