The Capital Market Line (CML) represents the risk-return trade-off for efficient portfolios in a market with risk-free assets. It illustrates the relationship between expected return and total risk (standard deviation) for portfolios that combine both a risk-free asset and a market portfolio of risky assets. The CML is a key concept within the Capital Asset Pricing Model (CAPM), showing how investors can achieve optimal portfolios by effectively allocating their capital between risk-free and risky investments.
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