Which of the following is the Capital market line?

Capital allocation line of a market portfolio

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Capital allocation line of a risk-free asset

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Both 1 and 2

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All of the above

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Solution

The correct option is C
Both 1 and 2

Answer (C): Both 1 and 2
Explanation: In both 1 and 2, the Capital allocation line of a market portfolio and the Capital allocation line of a risk-free asset is the Capital market line.
Also see:
Types of Capital Market
Money Market Vs Capital Market
MCQs on Capital Market

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