The Capital Market Line

Once a risk-free asset exists, the whole problem changes: every investor holds some mix of one risky portfolio and that risk-free asset. This section builds the capital market line from the efficient frontier - the market portfolio, the slope that prices risk, and how moving along the line trades expected return against standard deviation. It covers lending and borrowing positions, and why the same risky portfolio suits every investor regardless of appetite. The line is the conclusion of the whole risk section. It is worth the eight minutes.