Interested to Buy Any Domain ? << Click Here >> for more details...
Explain Capital Market Line and Security market line.
- 1 Answers
- 7508 Views
- I also Faced
- E-Mail Answers
Answer Posted / rehan rao
In Modern Portfolio Theory, the Security Market Line (SML)
is the graphical representation of the Capital Asset Pricing
Model. It displays the expected rate of return for an
overall market as a function of systematic,
non-diversifiable risk (its beta).
The Y-Intercept (beta=0) of the SML is equal to the
risk-free interest rate. The slope of the SML is equal to
the Market Risk Premium and reflects investors' degree of
risk aversion at a given time.
When used in portfolio management, a single asset is plotted
against the SML using its own beta and historical rate of
return. If the plot of the asset falls above the SML it is
considered to have a good rate of return relative to its
risk (the asset is undervalued by the CAPM, and should be
acquired), and vice versa if it falls below (the asset is
overvalued, and should be sold).
| Is This Answer Correct ? | 8 Yes | 3 No |
Post New Answer View All Answers
What does currency swap instrument manage?
Who is Underwriter?
I am attending the interview in ICICI BANK i need the interview tips and questions
How can Indian Economy be developed?
What is the difference between micro finance and micro credit?
What is usance promissory note?
What are mutual funds? Why are mutual funds better than stocks?
What do you mean by amortization and impairment?
Expand MCC.
Who is the Governor of Reserve bank of India (RBI)?
Explain debt service coverage ratio. What does it indicate?
What do you know about stock market?
What Is Home Equity Loan?
Tell something about Bhartiya Mahila Bank?
How important is the service sector for the economy?
