Question

5. Define Capital Allocation Line (CAL) and Capital Market Line (CML) and discuss differences between them.

5. Define Capital Allocation Line (CAL) and Capital Market Line (CML) and discuss differences between them.

Homework Answers

Answer #1

Capital Allocation line (CAL): A graphical representation of Risk Vs Return, wherein the CAL displays the return achieved by taking on a certain level of risk with its slope equalling reward to risk ratio.

Capital Market line (CML): A graphical representation of all the optimally feasible portfolios with a combination of risk free asset and market portfolio.

Differences:

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Show that any portfolio on the Capital Market Line (CML) with a positive weight in the...
Show that any portfolio on the Capital Market Line (CML) with a positive weight in the market portfolio is perfectly correlated with the market portfolio. Interpret this result.
Can multiple indifference curves be tangent to one capital allocation line (CAL)? Why or why not?
Can multiple indifference curves be tangent to one capital allocation line (CAL)? Why or why not?
Define and discuss the differences between operating, investing, and financing activities.
Define and discuss the differences between operating, investing, and financing activities.
define risk and return and discuss the ralationship between them.
define risk and return and discuss the ralationship between them.
Which of the following is not true about the Capital Market Line, the Security Market Line,...
Which of the following is not true about the Capital Market Line, the Security Market Line, and the Security Characteristic Line? Multiple Choice CML is the line that goes through the risk-free asset and the optimal risky portfolio SML has beta on the x-axis The y-axis for SCL has the excess return on the market The slope of SCL is beta
Discuss the physical differences between veins and arteries that give them their unique physiological differences. Be...
Discuss the physical differences between veins and arteries that give them their unique physiological differences. Be sure to discuss things like elastic fibers and other important structural components.
Define and discuss the similarities and differences between unconditioned motivating operations (UMO's) and conditioned motivating Operations...
Define and discuss the similarities and differences between unconditioned motivating operations (UMO's) and conditioned motivating Operations (CMO's).
Discuss the differences between LLC and LLP. Which one of them is more attractive to you?
Discuss the differences between LLC and LLP. Which one of them is more attractive to you?
Define the efficient market hypothesis (EMH). Discuss the real world evidence for the EMH, including differences...
Define the efficient market hypothesis (EMH). Discuss the real world evidence for the EMH, including differences across countries. Identify investment behaviors and trading biases that suggest investors ignore the evidence supporting the EMH.
. Discuss Four differences between risk and crisis Management. list them as 1, 2, 3, and...
. Discuss Four differences between risk and crisis Management. list them as 1, 2, 3, and 4.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT