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Q » Define security market line (SML).
06 Dec, 2025
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A » The Security Market Line (SML) represents the expected return of an investment as a function of its systematic, non-diversifiable risk, measured by beta, within the Capital Asset Pricing Model (CAPM). It is a graphical depiction showcasing the trade-off between risk and return, where the y-axis indicates expected return and the x-axis represents beta. The SML enables investors to evaluate whether a security is fairly priced relative to its risk.
06 Dec, 2025
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