Which one of the following is not a key difference between Capital Market Line (CML) & Security Market Line (SML) ?

CS Executive · Financial and Strategic Management · PYQS · June 2023
Which one of the following is not a key difference between Capital Market Line (CML) & Security Market Line (SML) ?
(A) CML uses systematic risk, while SML uses total risk
(B) CML uses efficient portfolio only, while SML uses both efficient & inefficient portfolio
(C) Capital Market Line is a proportional combination between Risk free Rate of Return and Market Return, while SML graphs all portfolios and securities which lie on and off the Capital Market Line
(D) None of the above

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Management

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