The capital market line
I) is a special case of the capital allocation line.
II) represents the opportunity set of a passive investment strategy.
III) has the one-month T-Bill rate as its intercept.
IV) uses a broad index of common stocks as its risky portfolio.
A. I, III, and IV
B. II, III, and IV
C. III and IV
D. I, II, and III
E. I, II, III, and IV
E. I, II, III, and IV
The capital market line is the capital allocation line based on the one-month T-Bill rate and a broad index of common stocks. It applies to an investor pursuing a passive management strategy.
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