Security market line (SML) is the representation of the Capital asset pricing model. It displays the expected rate of return of an individual security as a function of systematic, non-diversifiable risk . ==Formula== where: When used in portfolio management, the SML represents the investment`s opportunity cost (investing in a combination of the m....
The linear relationship between expected asset returns and betas posited by the Capital Asset Pricing Model.Line representing the relationship between expected return and market risk or beta. The slope of this line is the risk premium for beta.
Line representing the relationship between expected return and market risk. 
Line representing the relationship between expected return and market risk or beta. The slope of thi
The security market line (SML) presents the?capital asset pricing model?(CAPM) on a graph, seeking to demonstrate the levels of market risk based on the hypothesis of a perfect market.