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Equilibrium market price of risk

Definition: [crh] The slope of the capital market line (CML). Since the CML represents the expected Definition: return offered to compensate for a perceived level of risk, each point on the line is a balanced market conDefinition: dition, 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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