1
Q
Slope of the CAL
A
Sharp ratio
(E(rp)-rf)/sigma_p
2
Q
Define indifference curves
A
Curves containing portfolios with equivalent utility levels. Optimal portfolio located at intersection point of CAL and curve tangential to CAL
3
Q
Capital Market Line Definition
A
CAL that uses passive portfolio as the risky portfolio
4
Q
Indifference Curve equation
A
E(r) = U+0.5Asigma^2
