The capital market line depicts the relationship between

Question

Quizplus · Accepted Answer

The capital market line (CML) is a graphical representation of the risk-return tradeoff for an efficient portfolio that includes risk-free assets and the market portfolio. The y-axis represents expected returns, and the x-axis represents the standard deviation of returns (risk). Therefore, the CML depicts the relationship between expected returns and the standard deviation of returns, making answer B the correct choice. Answers A and C may be related to portfolio theory but are not directly related to the CML. Answer D is incorrect as the question is asking about the CML, so there must be a relationship between two variables depicted in the line.

The Capital Market Line Depicts the Relationship Between