Sep 26, 2025 · Learn about the capital allocation line (CAL), how it illustrates the risk-return tradeoff, and its role in optimizing investment portfolios with risk-free and risky assets.

The Capital Allocation Line (CAL), sometimes also referred to as the Capital Market Line (CML), is a graphical representation of the trade-off between expected return and risk of two investments.

What Is The Capital Allocation Line? The capital allocation line, also referred to as the capital market line, is the graph used to measure the risk related to securities and defines the …

The Capital Allocation Line (CAL) is a line that graphically depicts the risk-and-reward profile of assets, and can be used to find the optimal portfolio. The process to construct the CAL for a …

Capital allocation line (CAL) is a graph created by investors to measure the risk of risky and risk-free assets. The graph displays the return to be made by taking on a certain level of risk.

The Capital Allocation Line (CAL) is a graphical representation that illustrates the trade-off between risk and return for a portfolio that consists of a risky asset (or multiple risky assets) …

Sep 1, 2019 · We form a capital allocation line when we combine a risky asset portfolio with a risk-free asset. This represents the allocation between risk-free and risky assets based on investor …

In the risk-return space, the combination of the risk-free asset and any risky asset is a straight line. This line is called the capital allocation line as it shows how an investor’s capital is …

Mar 30, 2025 · The Capital Allocation Line (CAL): The CAL is a graphical representation that combines the risk-free rate of return with the Efficient Frontier. It helps investors determine the …

Mar 28, 2024 · The capital allocation line (CAL), also referred to as the capital market line (CML), illustrates all potential combinations of risk-free and risky assets on a graph.