Given an optimal risky portfolio with expected return of 16%, standard deviation of 20%, and a risk-free rate of 4%, what is the slope of the best feasible CAL?
A) 0.60
B) 0.14
C) 0.08
D) 0.36
E) 0.31

Question

Quizplus · Accepted Answer

The slope of the best feasible CAL is equal to the ratio of the expected return of the risky portfolio to its standard deviation. In this case, the slope is 16% / 20% = 0.8.

Given an Optimal Risky Portfolio with Expected Return of 16