Figure 24-1 
-In Figure 24-1, what is the function of the structure labelled as number 2?
Definitions:
Security Market Line
A representation in financial markets showing the relationship between risk and return for individual securities.
Expected Inflation Rate
The anticipated rate at which the general level of prices for goods and services will rise over a certain period of time.
Required Returns
The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.
Market Risk Premium
The difference between the expected return on a market portfolio and the risk-free rate.
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