Security Market Line
Security Market Line (also known by its acronym, SML) is a graphic that represents the relationship between the risk of an asset as measured by its beta and the required rates of return for individual securities. The SML equation is one of the key results of the CAPM: ri =rRF +b i(rM − rRF).
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Security Market Line (SML). Represents, in a graphical form, the relationship between the risk of an asset as measured by its beta and the required rates of return for individual securities. The SML equation is one of the key results of the CAPM: ri =rRF +b i(rM − rRF).
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
