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If you plot a stocks expected return against all of its possible betas that correspond with that return, the line is called the security market

If you plot a stocks expected return against all of its possible betas that correspond with that return, the line is called the security market line (see handout on CAPM and note, we did not do this above). Based upon the theory of CAPM, eventually the slopes of the security market line for the 3 stocks should converge. When this happens, it means that

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