The plot of a security's excess return relative to the market's excess return is called the ________.
A) efficient frontier
B) security characteristic line
C) capital allocation line
D) capital market line

Question

Quizplus · Accepted Answer

The plot of a security's excess return relative to the market's excess return is called the security characteristic line (SCL). This line shows how the security performs compared to the market and is often used in the Capital Asset Pricing Model (CAPM). The efficient frontier, capital allocation line, and capital market line are all related to portfolio theory, but not specifically to the plot of an individual security's excess returns.

The Plot of a Security's Excess Return Relative to the Market's