The slope of the CML is given by: A) [(R_F) - R_M]/$\sigma$_RF B) [(R_M) - R_F]/$\sigma$_M C) [(R_M) - R_F]/$\sigma$_F_R D) [(R_F) - R_M]/$\sigma$_M

Question

Quizplus · Accepted Answer

The slope of the Capital Market Line (CML) is calculated as the difference between the expected return on the market portfolio and the risk-free rate, divided by the standard deviation of the market portfolio's return. This is represented by choice B, where the numerator is the difference between the market return (R_M) and the risk-free rate (R_F), and the denominator is the standard deviation of the market portfolio's return (?_M).

The Slope of the CML Is Given By: A) [(RF) σ\sigmaσ

The Slope of the CML Is Given By:
A) [(R_F) $\sigma$