The security market line is defined as a positively sloped straight line that displays the relationship between which two of the following variables?
A)Beta and standard deviation
B)Systematic and unsystematic risk
C)Nominal and real returns
D)Expected return and beta
E)Risk premium and beta

Question

Quizplus · Accepted Answer

The security market line displays the relationship between expected return (y-axis) and beta (x-axis), as beta is a measure of systematic risk. The slope of the security market line represents the risk premium, which is the additional return investors demand for bearing extra market risk.

The Security Market Line Is Defined as a Positively Sloped