capital market line

capital market line definition - business

capital market line

The line used in the capital-asset pricing model to present the rates of return for efficient portfolios. These rates will vary depending on the risk-free rate of return and the level of risk (as measured by beta) for a particular portfolio. The capital market line shows a positive linear relationship between returns and portfolio betas. Also called market line. See also alpha, beta 1, systematic risk.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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