Question

The security characteristic line

plots the excess return on a security as a function of the excess return on the market.

allows one to estimate the beta of the security.

All of the options.

allows one to estimate the alpha of the security.

Answer 1

The SCL is plotted on a graph where the Y-axis is the excess return on a security over the risk-free return and the X-axis is the excess return of the market in general. The slope of the SCL is the security's beta, and the intercept is its alpha,

the answer is-

All of the options.