A portfolio to the right of the market portfolio on theCML is ___________. Â
| | a lending portfolio |
| | a borrowing portfolio |
| | an inefficient portfolio |
| | not possible |
| | none of the above |
Which of the following statements about CML and SML isFALSE?
| | Securities that plot on the SML have no value to investors. |
| | Securities that plot above the SML are undervalued. |
| | Investors expect to be compensated for systematic risk. |
| | The market Sharpe Ratio is the CML slope. |
| | None of the above |
Which of the following portfolios most likely fall belowthe efficient frontier? The risk-free rate is5%.
Portfolio | Expected returns | Expected standard deviation |
A | 7% | 12% |
B | 8% | 16% |
C | 11% | 15% |
D | 13% | 28% |
| | A | |
| | B | |
| | C | |
| | D | |
| | Not enough information | |
| | | | | |
