Capital Allocation Line - CAL

Capital Allocation Line - CAL

A line created in a graph of all possible combinations of risky and risk-free assets. Also known as the "reward-to-variability ratio".

Notes:

The graph displays to investors the return they can make by taking on a certain level of risk.

See also: Efficient Frontier, Expected Return, Modern Portfolio Theory - MPT, Portfolio, Risk, Risk/Return Tradeoff