The Security Market Line (SML) Is

question 76

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.
• E) All of the options.

---

Definitions:

Davis-Moore Thesis

The theory that social stratification is functional for society because it ensures that key social positions are held by the most capable people.

Social Stratification

A society’s hierarchical ranking of people into social classes.

Social Inequality

The presence of unequal chances and benefits for various social roles or standings within a community or society.

High-Status

A position or ranking within a social hierarchy that carries prestige, respect, or authority.