Ch $03$: Assignment $-$ Risk and Return: Part II

The points on the line $r_{RF}MZ$ represent:

Portfolios with the smallest degree of risk for a given expected return.

The best attainable combinations of risk and return.

Portfolios that are dominated by any portfolio at any point on the efficient frontier BME.

Portfolios that are dominated by portfolio A$.$

Which of the following is the correct expression for the Capital Market Line?

hat$(r{)}_p=r_{RF}+[\frac{\text{h}\text{a}\text{t}(r{)}_M-r_{RF}}{{}_M}]{}_p$

hat$(r{)}_M=r_{RF}+[\frac{\text{h}\text{a}\text{t}(r{)}_p-r_{RF}}{{}_M}]{}_p$

hat$(r{)}_p=r_{RF}+[\frac{\text{h}\text{a}\text{t}(r{)}_M-r_{RF}}{{}_M}]$

hat$(r{)}_p=[\frac{\text{h}\text{a}\text{t}(r{)}_M-r_{RF}}{{}_M}]{}_p$

Suppose that the return on the risk$-$free asset is $r_{RF}=15\%,$ the return on the market portfolio is hat$(r{)}_M=20\%,$ the market risk is ${}_M=10\%,$ and the portfolio risk is ${}_p=15\%.$ Then the expected rate of return on an efficient portfolio equal

Generally, a less risky portfolio would have $$ rate of return.