Relationship between risk and required return is classified as___________?
Correct answer: A. Security market line
- A. Security market line
- B. Required return line
- C. Market risk line
- D. Riskier return line
Explanation
The Security Market Line shows the relationship between a security's required return and its systematic risk, measured by beta. It is derived from the Capital Asset Pricing Model.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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