Security Market Line

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Revision as of 16:49, 24 August 2013 by imported>Doug Williamson (Create page. Source: ACT FMM material 6.2.1, section 4, pp5-7.)
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(SML).

The Security Market Line is a graphical presentation of the Capital asset pricing model formula:

Ke = Rf + beta x [Rm-Rf]

Where:

Ke = cost of equity.

Rf = theoretical risk free rate of return.

Beta = relative market risk.

Rm = average expected rate of return on the market.


See also

Capital Market Line