The Capital asset pricing model (CAPM) and its view regarding the expected return of a risky asset. Introduction: Security market line is an upward sloping positive line that represents the relationship between the expected return of a security and its beta coefficient. In other words, the security market line displays the relationship between the systematic risk of a risky investment and its expected return.

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Chapter 13.7, Problem 13.7CCQ

Summary Introduction

To discuss: The Capital asset pricing model (CAPM) and its view regarding the expected return of a risky asset.

Introduction:

Security market line is an upward sloping positive line that represents the relationship between the expected return of a security and its beta coefficient. In other words, the security market line displays the relationship between the systematic risk of a risky investment and its expected return.

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