Question: The CML versus the SML. a. You hold an efficient portfolio. Which of the CML or the SML gives you the expected return on your

The CML versus the SML. a. You hold an efficient portfolio. WhichThe CML versus the SML.

a. You hold an efficient portfolio. Which of the CML or the SML gives you the expected return on your portfolio? What could its composition be?

b. You hold an inefficient portfolio. Which of the CML or the SML gives you the expected return on your portfolio? What could its composition be?

c. Show that any portfolio on the CML is perfectly positively correlated with the market portfolio.

d. Use the answer to the previous question to show that the SML reduces to the CML when an investment is efficient.

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