Question

A plot/graph of the positive relation between systematic risk and expected return is called: security market line standard deviation and width of the normal distribution covariance graph capital asset pricing model

Answer 1

The plot/graph of the positive relation between systematic risk and expected return is called the security market line.

Step-by-step explanation:

The positive relation between systematic risk and expected return is represented by a graph called the security market line. The security market line shows the expected return on an investment based on its systematic risk, measured by beta. Stocks that are more risky are expected to have higher returns, while stocks that are less risky have lower expected returns.

Answer 2

A plot/graph of the positive relation between systematic risk and expected return is called A. security market line

What is the security market line ?

The security market line (SML) is a graphical representation of the capital asset pricing model (CAPM), which describes the relationship between a security's expected return and its systematic, non-diversifiable risk.

The SML shows that a security's expected return is linearly related to its beta, which is a measure of the security's covariance with the market portfolio.

The SML is a useful tool for understanding the relationship between risk and return and for making investment decisions. It can be used to compare the risk and return of different securities and to determine whether a security is overpriced or underpriced.