The Security Market Line (SML) Is

question 54

Multiple Choice

The security market line (SML) is

• A)the line that describes the expected return-beta relationship for well-diversified portfolios only.
• B)also called the capital allocation line.
• C)the line that is tangent to the efficient frontier of all risky assets.
• D)the line that represents the expected return-beta relationship.

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Definitions:

Operating Data

Information related to the day-to-day operations of a business, used to analyze performance and make decisions affecting productivity and profitability.

Conceptual Framework

A system of ideas and objectives that guide the development, preparation, and interpretation of financial reporting information.

FASB

Stands for the Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States.

Qualitative Characteristics

Features that make financial information useful to users, including relevance and faithful representation, among others, guiding the preparation and presentation of financial statements.