By finance theory, most securities will plot just above the capital market line.

Question

Quizplus · Accepted Answer

According to finance theory, most securities will plot below the Capital Market Line (CML) because the CML represents the risk-return combination of efficient portfolios that an investor can obtain by mixing the market portfolio with a risk-free asset. Securities that plot above the CML are considered to be offering higher returns for their level of risk than the market portfolio, which is theoretically rare since the market portfolio is assumed to be optimally diversified.

By Finance Theory, Most Securities Will Plot Just Above the Capital