Answer: Market line-C
Explanation:
Market Line/Security market line (SML) shows the relationship between job value and pay survey.it is a line drawn on a graphical chart that shows the representation of the capital asset pricing model (CAPM), which explains different levels market and risk of marketable securities against the expected return of the entire market. The SML gives a picture of the capital asset pricing model (CAPM), where the x-axis of the chart represents risk in terms of beta, and the y-axis of the chart represents expected return.
The security market line tends to explain risk-return relationships for securities, and assumes that investors have to be rewarded for the time value of money and the level of risk associated with any investment.
The formula for plotting the security market line
Required Return = Risk Free Rate of Return + Beta (Market Return - Risk Free Rate of Return)
Buisness Investors use the Market Line to evaluate and compare security offers in terms of favourable expected return against any risk associated. They use the position of the security whether high or below the SML as an indicator for return of risk .
