EQUILIBRIUM MARKET PRICE OF RISK

The slope of the capital market line (C.M.L.) . Since the C.M.L. represents the expected return offered to compensate for a perceived level of risk , each point on the line is a balanced market condition, or equilibrium. The slope of the line determines the additional expected return needed to compensate for a unit change in risk . The equation of the C.M.L. is defined by the Capital Asset Pricing Model .