If the expected return on a diversified portfolio lies above the CML, an investor should not buy the stock.

Name: If the expected return on a diversified portfolio lies above the CML, an investor should not buy the stock.
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Quizplus · Accepted Answer

The Capital Market Line (CML) represents the risk-return trade-off for efficient portfolios, and any portfolio lying above the CML offers a higher return for a given level of risk than the market portfolio, making it an attractive investment opportunity.

If the Expected Return on a Diversified Portfolio Lies Above