Question:

Which of the following statements is false about the Security Market Lines (SML)?

A.

SML represents normal trade-off between return and risk

B.

The vertical distance of the security‘s plot on the graph from the SML is called the security‘s alpha

C.

SML is same as the characteristic line for any security

D.

Ex-post SMLs are used to evaluate the performance of portfolio managers

Answer» c. SML is same as the characteristic line for any security