Characteristic Line

Dictionary Says

Definition of 'Characteristic Line'

A line formed using regression analysis that summarizes a particular security or portfolio's systematic risk and rate of return. The rate of return is dependent on the standard deviation of the asset's returns and the slope of the characteristic line, which is represented by the asset's beta.
Investopedia Says

Investopedia explains 'Characteristic Line'

A characteristic line of a stock is the same as the security market line, and is very useful when employing the capital asset pricing model, or when using modern portfolio formation techniques. The slope of the line, which is a measure of systematic risk, determines the risk-return tradeoff. According to this metric, the more risk you take on - as measured by variability in returns - the higher the returns you can expect to earn.

There is considerable controversy regarding the use of beta as a measure of risk and return.
Search results for

'Characteristic Line'

  • CFA Level 1 Study Guide - Portfolio Management - The Capital Asset ...

    http://www.investopedia.com/exam-guide/cfa-level-1/portfolio-management/capm-capital-asset-pricing-model.asp
    Learn the theory and formulas behind the capital asset pricing model. Shows how
    security valuation relates to CAPM and the characteristic line. ...
  • The Week Ahead: Another Ride on the Rollercoaster?

    http://stocks.investopedia.com/stock-analysis/moneyshow/TheWeekAheadAnotherRideontheRollercoaster.aspx
    ... Such a steep decline in just a few weeks is more characteristic of panic sell ... support
    at $110.41 on Tuesday and broke below the weekly uptrend (line a). Friday ...
  • Make Money With The Consumer Cyclical And Staple Indicator

    http://www.investopedia.com/articles/economics/09/consumer-cylical-staple-indicator.asp
    ... One common characteristic of consumer staple stocks is that they tend to also ... fund
    to the Spyders Consumer Staples (XLP) fund using a relative strength line. ...
  • Investment Valuation Ratios: Price/Earnings Ratio | Investopedia

    http://www.investopedia.com/university/ratios/investment-valuation/ratio4.asp
    ... Hence, as a generalization, stocks with this characteristic are considered to be
    growth ... This information is readily available in Value Line or S&P stock reports ...
  • Conference Board: Composite Index Of Lagging Indicators ...

    http://www.investopedia.com/university/conferenceboard/conferenceboard4.asp
    ... The lagging characteristic of this component's peaks is less predictable. ... the troughs
    come first in the Index of Leading Indicators (red line), followed by the ...
  • Successful Companies That Improved With New Leadership ...

    http://financialedge.investopedia.com/financial-edge/1211/Succesful-Companies-That-Improved-With-New-Leadership.aspx
    ... black and white movie cartoons featuring a rodent with human characteristic called
    Mickey ... and super Walmart stores opened which sold a full line of groceries ...
  • Play The Usana Discount

    http://stocks.investopedia.com/stock-analysis/2011/Play-The-Usana-Discount-USNA-HLF-NUS-AVP-BRK.A0601.aspx
    ... Skepticism is a healthy characteristic, to a degree. ... For more, see Investing In China.).
    Bottom Line The five hats leave some unanswered questions. ...
  • What Is Servant Leadership?

    http://www.investopedia.com/articles/financialcareers/10/servant-leadership.asp
    ... along with the completion of job tasks is the focus of this characteristic. ... The Bottom
    Line Servant leadership has many useful concepts that can be applied to ...
  • Could Your Company Be A Target For Activist Investors?

    http://www.investopedia.com/articles/stocks/08/activist-investor.asp
    ... Another characteristic of a company with the potential to attract activists is having ...
    Cut Costs A company's cost structure can severely crimp its bottom line. ...
  • Understanding Liquidity Risk

    http://www.investopedia.com/articles/trading/11/understanding-liquidity-risk.asp
    ... The Bottom Line Liquidity risk can be parsed into funding (cash-flow) or ... has withdrawn
    buyers, this is called exogenous liquidity risk (a characteristic of the ...

Related Articles

Partner Links