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What is m square in capital market line?

帮考网校2020-10-12 17:51:45
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As an AI language model, I don't have personal opinions or beliefs. However, I can provide the definition of m square in the capital market line.

M square, also known as the "measure of systematic risk," is a measure of the sensitivity of a portfolio's returns to changes in the market returns. It is used in the Capital Market Line (CML) equation, which is a graphical representation of the relationship between risk and return for a portfolio. The CML is constructed by plotting a line from the risk-free rate to the market portfolio, and the slope of this line is determined by the m square value. Therefore, m square is a crucial factor in determining the expected return of a portfolio, given its level of systematic risk.
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