Which of the Following Statements Is CORRECT

question 25

Multiple Choice

Which of the following statements is CORRECT?

• A) The slope of the CML is ( _M − r_RF)/b_M.
• B) All portfolios that lie on the CML to the right of σ_M are inefficient.
• C) All portfolios that lie on the CML to the left of σ_M are inefficient.
• D) The slope of the CML is ( _M − r_RF)/σ_M.
• E) The Capital Market Line (CM
• L)is a curved line that connects the risk-free rate and the market portfolio.

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Definitions:

Profits and Losses

The financial gain or loss that a business experiences, calculated as the difference between revenue and expenses.

Real Assets

Assets that have physical form or are tangible, such as real estate, commodities, or natural resources, as opposed to financial assets like stocks or bonds.

Wealth Distribution

The manner in which wealth is shared among individuals in a society, often analyzed for its levels of equality or inequality.

Coincidence of Wants

A situation in a barter economy where two parties each possess goods or services that the other wants, facilitating a direct exchange without the need for money.