Which of the following statements is not correct about the capital allocation line (CAL)? Question options: Capital allocation line using the market index portfolio as the risky asset is called the capital market line (CML). One can achieve the maximum possible return along the capital allocation line by investing 100% in the risky asset. It is a plot of risk-return combinations available by varying allocation between risky and risk-free assets. The slope of the capital allocation line is the Sharpe ratio.

The asset whose risk is not zero is known as risky asset. The return from risky asset is more than…

Answered: Which of the following statements is…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 7MC: Write out the equation for the Capital Market Line (CML), and draw it on the graph. Interpret the...

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Which of the following statements is not correct about the capital allocation line (CAL)?

Question options:

	Capital allocation line using the market index portfolio as the risky asset is called the capital market line (CML).
	One can achieve the maximum possible return along the capital allocation line by investing 100% in the risky asset.
	It is a plot of risk-return combinations available by varying allocation between risky and risk-free assets.
	The slope of the capital allocation line is the Sharpe ratio.

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