Which of the Following Statements Regarding the Capital Allocation Line

question 41

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.

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