The capital market line

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1. Olivia Puckett would like to save up to pay for a vacation to Italy with her friends. The trip is expected to cost $6,000.00 and she needs this money in three years. She has found an investment account that would earn 5% on an annual basis. What sum of money must she invest now to get to the $6,000.00 in 3 years?

A) $5,183.03

B) $5,175.65

C) $6,000.00

D) $8,433.21

2. The capital market line:

and the characteristic line are two terms describing the same function.

intersects the feasible set at its midpoint.

has a vertical intercept at the risk-free rate of return.

has a horizontal intercept at the market beta.

lies tangent to the opportunity set at its minimum point.

Reference no: EM132049846

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