Which of the following statements about the security market line (SML) are true (only 1 is true)?
A. The SML provides a benchmark for evaluating expected investment performance
B. The SML leads all investors to invest in the same portfolio of risky assets
C. The SML is a graphic representation of the relationship between expected return and beta
D. Properly valued assets plot exactly on the SML
Answer:C
Which of the following statements about the security market line (SML) are true (only 1 is true)?
A. The SML provides a benchmark for evaluating expected investment performance B. The SML leads all investors to invest in the same portfolio of risky assets C. The SML is a graphic representation of the relationship between expected return and beta D. Properly valued assets plot exactly on the SML