The CML must always be upward sloping.

Name: The CML must always be upward sloping.
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Question

Quizplus · Accepted Answer

The Capital Market Line (CML) represents portfolios that optimally combine risk and return, assuming all investors can lend and borrow at the risk-free rate. It is upward sloping because it reflects the trade-off between expected return and risk (measured as standard deviation), indicating that higher expected returns come with higher risk.

The CML Must Always Be Upward Sloping