Which Of The Following Describes A Portfolio That Plots Below The Security Market Line? Question Answer Which of the following describes a portfolio that plots below the security market line? If it is below the line, you’re not getting enough return given its risk. (risk ratio is too low) interest gets smaller when principle__ gets
How Does The SML Differ From The CML? Security Market Line. The CML is sometimes confused with the security market line (SML). The SML is derived from the CML. While the CML shows the rates of return for a specific portfolio, the SML represents the market’s risk and return at a given time, and shows
What Do Analysts Measure Market Return? Most analysts use the S&P 500 as a benchmark for calculating past market performance. Usually, a government bond yield is the instrument used to identify the risk-free rate of return, as it has little to no risk. How do you analyze a stock return? P/E Ratio. A common method
What Does CAPM Measure? What does CAPM measure? The capital asset pricing model (CAPM) is an idealized portrayal of how financial markets price securities and thereby determine expected returns on capital investments. The model provides a methodology for quantifying risk and translating that risk into estimates of expected return on equity. How do you use