![]() ![]() so the CML has maximum slope/Sharpe Ratio. ![]() For the line, to move above the semi-parable is impossible, but if we move below (possible) we have the (inefficient) CAL. ![]() in this framework the slope is the Sharpe ratio! This line is the CML and it is tangent with previous semi-parabola. Other efficient portfolios are linear combinations between tangent portfolio and risk free asset. It has to get the ground game going a little better than it did against UC Davis, Plummer has to avoid mistakes, and the D has to raise its game a few notches. Now every point/portfolio have only 1 risky component. There’s not going to be anything flashy about Cal, but its style has to work. CML is a special case of the CAL where the risk portfolio is the market. /rebates/&252fcal-vs-cml. If we have N risky asset + a risk free rate, we obtain, as efficient frontier, a straight line. Investors prefer higher utility/return when compared to an asset with the. However, to give the idea, if we have N risky assets we obtain, as efficient frontier, a semi-parabola and the weights of the countless efficient portfolio change point by point. We may move around this demonstration to explain most of portfolio theory. Your question is very important! In formal way to demonstrate it is very interesting. ![]()
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