Slope of SML

[lxada269]

Why is the slope of the SML the market risk premium and not Beta?

 

[mwvt9]

Beta tells you how “exposed” you are to the market risk premium.
The acual slope tells you how much return you get per unit of systematic risk.

 

[McLeod81]

Beta is on the X- axis. The E(MRP) is the slope because it shows how much the expected return will change per unit change in Beta.
E(R) = Rf + E(MRP)*Beta