What is the reward-to-risk ratio of the SML?

The reward-to-risk ratio of the Security Market Line (SML) is represented by the slope of the line, which reflects the expected return of an asset relative to its systematic risk, measured by beta. In the Capital Asset Pricing Model (CAPM), this ratio is equal to the market risk premium divided by the beta of the asset. A higher ratio indicates a more favorable return for the level of risk taken, while a lower ratio suggests less reward for the risk involved. The SML serves as a benchmark for evaluating the performance of individual securities against their expected risk and return.