Asked by
Michelle Whitehead
on Oct 20, 2024
Verified
In a world where the CAPM holds, which one of the following is not a true statement regarding the capital market line?
A) The capital market line always has a positive slope.
B) The capital market line is also called the security market line.
C) The capital market line is the best-attainable capital allocation line.
D) The capital market line is the line from the risk-free rate through the market portfolio.
Capital Market Line
A theoretical line representing the risk versus return of the market of all investable assets, assuming risk-free borrowing and lending rates.
Security Market Line
A representation of the capital asset pricing model which shows the relationship between risk (as measured by beta) and expected return of investments.
- Gain an understanding of the essential idea and parts of the Capital Asset Pricing Model (CAPM).
Verified Answer
JK
Learning Objectives
- Gain an understanding of the essential idea and parts of the Capital Asset Pricing Model (CAPM).