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Basic Question 0 of 16
The SML relates ______.
B. expected return of securities to expected return of portfolios
C. efficient sets of portfolios to the risk-free rate
D. expected return to beta
E. standard deviation to risk
A. expected return to standard deviation
B. expected return of securities to expected return of portfolios
C. efficient sets of portfolios to the risk-free rate
D. expected return to beta
E. standard deviation to risk
User Contributed Comments 3
| User | Comment |
|---|---|
| mattg | SML relates risk (measured by beta) to expected return |
| jpducros | systematic risk I would say...not total risk |
| khalifa92 | @ jpducros you're mistaken. the security market line applies to any security, efficient or not. total risk and systematic are equal to ONLY for efficient PORTFOLIOS because those portfolios have no diversifiable risk remaining. don't mix the two things. |
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Learning Outcome Statements
analyze an industry's structure and external influences using Porter's Five Forces and PESTLE frameworks
CFA® 2025 Level I Curriculum, Volume 3, Module 6.