The security market line (SML)
A) can be portrayed graphically as the expected return-beta relationship.
B) can be portrayed graphically as the expected return-standard deviation of market returns relationship.
C) provides a benchmark for evaluation of investment performance.
D) a and c.
E) b and c.

Question

Quizplus · Accepted Answer

The SML can be graphically represented as the expected return-beta relationship, which provides a measure of how much return an investor should expect to receive given the level of risk (beta) they are assuming. The SML can also act as a benchmark for evaluating investment performance, as it provides a framework for determining whether an investment is generating higher or lower returns than should be expected based on its level of risk.

The Security Market Line (SML)