Capital Market Line

(CML).

The Capital Market Line considers theoretical portfolios consisting of different proportions of:

1. A theoretical risk-free asset, and
2. The most efficient portfolio of market assets (also known as the market portfolio).

The CML is a straight line relationship between:

1. The expected return on such a theoretical portfolio, and
2. The risk of such a portfolio.

See also

• Modern Portfolio Theory
• Security Market Line