The capital market line results from combining the efficient frontier with a risk-free asset. Given the availability of risky assets and a risk-free asset, the best combinations of risk and return are represented by:
A. combinations of the market portfolio and risk-free borrowing or lending.
B. the efficient frontier of risky assets.
C. combinations of the minimum variance portfolio of risky assets and the risk-free asset.
D. combinations of the market portfolio and minimum variance portfolio of risky assets.
Answer:A
The best combinations of risk and return are represented by combinations of the market portfolio and risk-free borrowing or lending.