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Investing Glossary:
Equilibrium market price of risk
Copyright 2010,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
| Equilibrium market price of risk
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| Definition: |
| The slope of the Capital market line (CML). Since the CML 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 CML is defined by the capital Asset pricing model.
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