Security Market Line: Difference between revisions
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imported>Doug Williamson (Create page. Source: ACT FMM material 6.2.1, section 4, pp5-7.) |
imported>Doug Williamson m (Layout.) |
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The Security Market Line is a graphical presentation of the [[Capital asset pricing model]] formula: | The Security Market Line is a graphical presentation of the [[Capital asset pricing model]] formula: | ||
Re = Rf + beta x [Rm-Rf] | |||
Where: | Where: | ||
Re = return on security. | |||
Rf = theoretical [[risk free rate of return]]. | Rf = theoretical [[risk-free rate of return]]. | ||
Beta = relative market risk. | Beta = relative market risk. | ||
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== See also == | == See also == | ||
[[Capital Market Line]] | *[[Capital Market Line]] | ||
[[Category:Corporate_finance]] | |||
Latest revision as of 20:57, 5 February 2018
(SML).
The Security Market Line is a graphical presentation of the Capital asset pricing model formula:
Re = Rf + beta x [Rm-Rf]
Where:
Re = return on security.
Rf = theoretical risk-free rate of return.
Beta = relative market risk.
Rm = average expected rate of return on the market.
