Question

What does the Security Market Line (SML) in CAPM represent?

a.

The relationship between risk and expected return

b.

The market imperfections in the financial market

c.

The inflation and money supply factors

d.

The relationship between risk and interest rate

Answer: (a).The relationship between risk and expected return Explanation:The Security Market Line (SML) in CAPM represents the relationship between systematic risk and expected return.

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Q. What does the Security Market Line (SML) in CAPM represent?

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