Question: Write out the equation for the capital market line (CML) and draw it on the graph. Interpret the CML. Now add a set of indifference

Write out the equation for the capital market line (CML) and draw it on the graph. Interpret the CML. Now add a set of indifference curves, and illustrate how an investor's optimal portfolio is some combination of the risky portfolio and the risk-free asset. What is the composition of the risky portfolio?

Expected Portfolio Return, Гр M. TRF Risk,

Expected Portfolio Return, M. TRF Risk,

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The line r RF mz in the figure above is called the capital market line CML It has an intercept of r ... View full answer

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