Which of the Following Statements Regarding the Capital Allocation Line

question 29

Multiple Choice

Which of the following statements regarding the capital allocation line (CAL) is false?

• A)The CAL shows risk-return combinations.
• B)The slope of the CAL equals the increase in the expected return of the complete portfolio per unit of additional standard deviation.
• C)The slope of the CAL is also called the reward-to-volatility ratio.
• D)The CAL is also called the efficient frontier of risky assets in the absence of a risk-free asset.

Comprehend the influence of U.S. tax laws on pension plan funding.

Grasp the accounting treatment of postretirement benefit plans, including the recognition of actual return on plan assets.

Know the effects of pension plan economics on balance sheets and income statements.

Understand the components of pension expense and how they are calculated.

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