You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. The slope of the capital allocation line formed with the risky asset and the risk-free asset is equal to

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The slope of the capital allocation line is equal to the ratio of the difference between the expected return on the risky asset and the risk-free asset to the standard deviation of the risky asset. In this case, the slope is (0.17 - 0.04) / 0.40 = 0.325.

You Invest $1,000 in a Risky Asset with an Expected