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?

Question

Quizplus · Accepted Answer

The slope of the best feasible CAL is equal to the Sharpe ratio of the risky portfolio, which is calculated as (Expected return - Risk-free rate) / Standard deviation. In this case, the Sharpe ratio is (16% - 4%) / 20% = 0.60.

Given an Optimal Risky Portfolio with Expected Return of 16