The security market line is not stable over time and shifts in it can result in a change in required return.

Question

Quizplus · Accepted Answer

The security market line represents the relationship between the expected return and the beta of a security. It is affected by various factors such as changes in market risk, inflation, interest rates, and economic conditions. Therefore, it is not stable over time and shifts in it can result in a change in required return for investors.

The Security Market Line Is Not Stable Over Time and Shifts