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What does the slope of the security market line represent in financial terms?

A) Market volatility
B) Risk-free rate
C) Expected return
D) Beta coefficient

1 Answer

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Final answer:

The slope of the security market line represents the Beta coefficient, which measures the systematic risk of a stock compared to the market.

Step-by-step explanation:

The slope of the security market line represents the Beta coefficient in financial terms.

Beta coefficient is a measure of the sensitivity of a stock's returns to the overall market returns. It measures the systematic risk of a stock compared to the market. A higher Beta coefficient indicates higher volatility and greater risk, while a lower Beta coefficient indicates lower volatility and lower risk.

Therefore, the correct answer is D) Beta coefficient.

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