Forex Trading

Discuss the similarities and differences between the CML and SML as models of the risk-return tradeoff Is one model better than the other when evaluating a well-diversified portfolio? Explain.

SML Security Market Line is a graphical representation of the capital asset pricing model of modern portfolio theory. SML shows the relationship between expected return and risk of a security. SML is constructed by plotting the risk and return of a security on a graph. SML is downward sloping, indicating that as risk increases, expected …

Discuss the similarities and differences between the CML and SML as models of the risk-return tradeoff Is one model better than the other when evaluating a well-diversified portfolio? Explain. Read More »