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Unformatted text preview: D) A and B. E) A and C. Answer: D Difficulty: Easy Rationale: A and B are possible steps in asset allocation. C is related to security selection. 20. In the mean-standard deviation graph, the line that connects the risk-free rate and the optimal risky portfolio, P, is called ______________. A) the Security Market Line B) the Capital Allocation Line C) the Indifference Curve D) the investor's utility line E) none of the above Answer: B Difficulty: Moderate Rationale: The Capital Allocation Line (CAL) illustrates the possible combinations of a risk-free asset and a risky asset available to the investor Bodie, Investments, Sixth Edition...
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This note was uploaded on 01/31/2010 for the course ECON 3660DE taught by Professor Patrickmartinandvitalialexeev during the Spring '10 term at University of Guelph.
- Spring '10