Which statement is not true regarding the capital market line (CML)?
A)The CML is the line from the risk-free rate through the market portfolio.
B)The CML is the best attainable capital allocation line.
C)The CML is also called the security market line.
D)The CML always has a positive slope.

Question

Quizplus · Accepted Answer

The statement that the CML is also called the security market line is not true. The security market line (SML) is a different line that shows the expected return of a security based on its beta, whereas the CML shows the optimal portfolio allocation between the risk-free asset and the market portfolio.

Which Statement Is Not True Regarding the Capital Market Line