Which of the following statements is CORRECT?
A) The Capital Market Line (CML) is a curved line that connects the risk-free rate and the market portfolio.
B) The slope of the CML is ( $ \hat{r} $ M - rRF)/bM.
C) All portfolios that lie on the CML to the right of $\sigma$M are inefficient.
D) All portfolios that lie on the CML to the left of $\sigma$M are inefficient.
E) The slope of the CML is ( $ \hat{r} $M - rRF)/$\sigma$M..

Question

Quizplus · Accepted Answer

The slope of the Capital Market Line (CML) is calculated as the difference between the expected return of the market portfolio ($ \hat{r} $M) and the risk-free rate (rRF) divided by the standard deviation of the market portfolio ($\sigma$M).

Which of the Following Statements Is CORRECT? A) the Capital r^ \hat{r} r^

Which of the Following Statements Is CORRECT?
A) the Capital $\hat{r}$