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Contents Time Value of Money Annuities Perpetuities Kinds of Interest Rates Future Value of an Uneven Cash flow Probability Distribution Standard Deviation CAPM Security Market Line Bond Valuation Stock Valuation Cost of Capital The Balance Sheet Capital Budgeting Control Your Credit Weather Financial Terms Financial Charts Fuel Mileage Energy Efficiency ![]() ![]() Espanol Portuguese Disclaimer
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TeachMeFinance.comThe Security Market Line The formula for CAPM is Ks = Krf + B ( Km - Krf).
I f you make a graph of this situation, it would look like this:
The red line is the Security Market Line. How did we get it? We plugged in a few
sample betas into the equation
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