Consider two stocks, 1 and 2. Separately for each stock, you plot the stock's excess return (y-axis) against the market's excess return (x-axis): i.e. the Security Characteristic Line (SCL). The slope of the SCL is positive for both stocks, and is flatter for Stock 2 than for stock 1. This implies that beta is greater for Need to kngw the risk-free rate to determine What is a stock? Stock 1 The betas are equal for both stocks Stock 2