Which of the following statements is true in relation to the capital markets line (CML):
I. The CML is a transformation line that is tangential to the efficient frontier
II. The CML allows an investor to obtain the highest return for a given level of risk chosen according to the investor's risk attitude
III. The CML is the line passing through the point on the efficient frontier with the highest Sharpe ratio, and a y-intercept equal to the risk free rate
IV. The Sharpe ratio for the points on the CML increase in a linear fashion
Submit