The slope of the CML is the:
A)standard deviation for efficient portfolios.:::::
B)market price of risk for efficient portfolios.
C)risk-free rate.
D)risk premium for the market portfolio.

Question

Quizplus · Accepted Answer

The slope of the Capital Market Line (CML) represents the market price of risk for efficient portfolios. It measures the additional expected return that an investor will receive for taking on one unit of risk beyond the risk-free rate. Therefore, option B is the correct choice. Option A is incorrect because the standard deviation of efficient portfolios is represented by the horizontal axis on the graph. Option C is incorrect because the risk-free rate is represented by the y-intercept of the CML. Option D is incorrect because the risk premium for the market portfolio is represented by the difference between the expected return of the market portfolio and the risk-free rate.

The Slope of the CML Is The