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Characteristic Line
In finance, a line that describes the relationship between the returns on a stock and the returns on the market, used in the Capital Asset Pricing Model (CAPM).
Stable Equilibrium
A state in which a system, once disturbed, returns to its original condition because the equilibrium is stable.
Expected and Required Returns
The returns that investors anticipate or demand from an investment considering its risk, often guiding investment decisions.
SML
Stands for Security Market Line; it represents the relationship between the expected return of an investment and its risk in the capital asset pricing model (CAPM).
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