Security Analysis Quiz 2 Flashcards
1
Q
Capital Market Line (CML)
A
Capital market line is the tangent line drawn from the point of the risk-free asset to the feasible region for risky assets. The tangency point M represents the market portfolio, so named since all rational investors should hold their risky assets in the same proportions as their weights in the market portfolio.
2
Q
CAPM definition
A
Gives predictions for what expected returns should be on individual risky assets in equilibrium.
