The following table shows risk and return measures for two portfolios.
|
Portfolio |
Average Annual Rate of Return |
Standard Deviation |
Beta |
|
R |
11% |
10% |
0.5 |
|
S&P 500 |
14% |
12% |
1.0 |
When plotting portfolio R on the preceding table relative to the SML, portfolio
R lies:
a. On the SML.
b. Below the SML.
c. Above the SML.
d. Insufficient data given.
When plotting portfolio R relative to the capital market line, portfolio R lies:
a. On the CML.
b. Below the CML.
c. Above the CML.
d. Insufficient data given.