Candidates many times confuse between these two models. The Capital Market Line (CML) is a relationship between the required rate of return and the standard deviation of a security or a portfolio which lies on the efficient frontier. The Security Market Line (SML) is a relatioship between the required rate of return and the systematic risk of a security or a portfolio. Both give the same answer for the required rate of return in equilibrium. The difference is based on the risk measure.

While the total risk is measured by standard deviation of returns, only a part of that risk is priced in the market. Total risk can be decomposed in the following manner:

Total risk = Systematic Risk + Diversifiable Risk

Since efficient portfolios have zero diversifiable risk their total risk equals systematic risk. SML can be used for efficient and non-efficient securities and portfolios with one caution: only their systematic risk should be used in the SML. Thus, they both boil down to the same thing. They both ignore diversifiable risk. The risk measure used in SML is the beta of the security. If one wants to use the CML for a security, one should multiply is beta by the market's standard deviation for estimation of systemtic risk that needs to be plugged into the CML.