The difference between CML and SML is that CML primarily determines your average rate of success or loss in the market share, whereas, SML determines the market risk you are running with your investment. It shows a point or degree beyond which you might run a risk with your shares.

Which of the following statements about the difference between the SML and the CML is true?

Which of the following statements about the difference between the SML and the CML is TRUE? CML consists of efficient portfolios, while the SML is concerned with all portfolios or securities. ... Under the CMT, the relevant risk to consider with any security is: its covariance with the market portfolio.

What is the difference between SML and CAPM?

The CAPM is a formula that yields expected return. ... SML is a graphical depiction of the CAPM and plots risks relative to expected returns. A security plotted above the security market line is considered undervalued and one that is below SML is overvalued.