The slope of the line fitted to a plot of a stock's returns versus the market's returns measures the:
A) security market line.
B) beta of the stock.
C) market risk premium.
D) capital asset pricing model.

Question

Quizplus · Accepted Answer

The slope of the line represents the beta of the stock, which measures the stock's volatility relative to the market. Beta is a key component of the Capital Asset Pricing Model (CAPM), which is used to calculate the expected return on an asset based on its risk relative to the market.

The Slope of the Line Fitted to a Plot of a Stock's