The Capital Market Line (CML) is a concept from Modern Portfolio Theory (MPT) that represents the risk-return trade-off for efficient portfolios — those combining the risk-free asset (such as government securities) with the optimal risky portfolio (the market portfolio). The CML plots expected portfolio return on the Y-axis against total risk (standard deviation) on the X-axis, and all portfolios lying on the CML are considered perfectly efficient. The slope of the CML represents the Sharpe Ratio of the market portfolio — the maximum return achievable per unit of total risk. For investors and portfolio managers on Ventura Securities, the CML provides a theoretical foundation for asset allocation decisions, helping evaluate whether the risk assumed in a portfolio is being adequately rewarded by expected returns.
For android only
