If the assumption that there are no transaction costs is relaxed,the SML will be a
A) Straight line.
B) Band of securities.
C) Convex curve.
D) Concave curve.
E) Parabolic curve.

Question

Quizplus · Accepted Answer

When transaction costs are considered, the Security Market Line (SML) becomes a band of securities rather than a single straight line, as different investors face different transaction costs.

If the Assumption That There Are No Transaction Costs Is