If the expected return on a diversified portfolio lies below the CML, an investor should not buy the stock.

Name: If the expected return on a diversified portfolio lies below the CML, an investor should not buy the stock.
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Quizplus · Accepted Answer

The Capital Market Line (CML) represents portfolios that optimally combine risk and return. If a portfolio's return is below the CML, it is not providing adequate return for its level of risk, indicating inefficiency.

If the Expected Return on a Diversified Portfolio Lies Below