The answer is option A because the efficient portfolio only include only risky assets but if we combined risk free assets with risky assets then we will get capital allocation line
whereas security market line is a graphical representation of the capital assets pricing model and applies to all securities whether they are efficient or not. The graph has beta on the x axis and expected return on the y axis
The answer is option A because the efficient portfolio only include only risky assets but if we combined risk free assets with risky assets then we will get capital allocation line
whereas security market line is a graphical representation of the capital assets pricing model and applies to all securities whether they are efficient or not. The graph has beta on the x axis and expected return on the y axis
You can see the diagram of SML