The security market line can be thought of as expressing relationships between required rates of return and:
A)the time value of money.
B)beta which reflects market risk.
C)total risk.
D)portfolio diversification.

Question

Quizplus · Accepted Answer

The security market line shows the expected return on a security as a function of its beta, which reflects market risk. The slope of the line represents the market risk premium, which compensates investors for taking on systematic (market) risk. The other choices are not directly related to the security market line.

The Security Market Line Can Be Thought of as Expressing