The Combination of the Efficient Set of Portfolios with a Riskless

question 54

Multiple Choice

The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in:

• A)the capital market line which shows that all investors will only invest in the riskless asset.
• B)the capital market line which shows that all investors will invest in a combination of the
• Riskless asset and the market portfolio.
• C)the security market line which shows that all investors will invest in the riskless asset only.
• D)the security market line which shows that all investors will invest in a combination of the
• Riskless asset and the market portfolio.
• E)None of the above.

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Definitions:

Pre-tax Cost

The expense or cost associated with an investment or project before any taxes are deducted.