Referring to the Capital Market Line, there exists a(n) _______ relationship between the expected return on an efficient portfolio and ____ risk.
A) Direct, total
B) Inverse, total
C) Direct, unsystematic
D) Inverse, unsystematic

Question

Quizplus · Accepted Answer

The Capital Market Line (CML) illustrates a direct relationship between the expected return on an efficient portfolio and its total risk (measured by standard deviation). This means as the risk of the portfolio increases, its expected return also increases.

Referring to the Capital Market Line, There Exists A(n) _______