Which of the Following Statements Regarding the Capital Allocation Line

question 54

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.
• E)Both A and D are false.

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