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Discussion On CMT On Jne 8 2021
Discussion On CMT On Jne 8 2021
When a risk free security is combined with risky assets then the locus of portfolios can be given by a
line which is called – capital market line
Assumptions
- All investors can lend and borrow at risk free security’s rate of interest
- All investors have similar expectations of the risk and return of different securities
- CMT works in equilibrium i.e. perfect coherence
- Stock is divisible
- Holding period is one year
- No capital gain tax, no transactions cost, no dividend tax
- There is no inflation
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