Capital market line (CML) is a chart that reflects the anticipated return of a portfolio comprising of all conceivable extents between the showcase portfolio and a risk-free resource. The market portfolio is differentiated, carries as it were a precise hazard, and its anticipated return is break even with the anticipated showcase return as an entire. In common terms, the anticipated return of a specific portfolio (E(RC)) can be calculated as takes after
where;
y = proportion of a market portfolio
E(RM) = expected return of a market portfolio
(1-y) = proportion of a risk-free asset
RF = risk-free rate
Define the following terms, using graphs or equations to illustrate your
How are the capital market line and the security market line different
Define the following terms. a. Risk b.
What is an efficient portfolio? What is the Capital Market Line
The beta coefficient of an asset can be expressed as a function
What is the Security Market Line (SML)? What information
a. Suppose Asset A has an expected return of 10%
A zero-investment portfolio with a positive alpha could arise if
Plot the capital market line (CML), the nine stocks,
Investment Management Inc. (IMI) uses the capital market line
