The ________ reward-to-variability ratio is found on the ________ capital market line.A) lowest; steepestB) highest; flattestC) highest; steepestD) lowest; flattest

Question

The ________ reward-to-variability ratio is found on the ________ capital market line.A)  lowest; steepestB)  highest; flattestC)  highest; steepestD)  lowest; flattest

Yaritza Castaneda · Accepted Answer

Final Answer : C, Explanation :  The reward-to-variability ratio is highest when the return is high and the risk is low. This implies that the investor is being compensated with higher returns for taking on lower risk. The steepest capital market line represents the maximum return an investor can earn for a given level of risk. Therefore, the highest reward-to-variability ratio can be found on the steepest capital market line.

The reward-to-variability ratio is found on the capital market line.

A) lowest; steepest
B) highest; flattest
C) highest; steepest
D) lowest; flattest

Definitions

Learning Objectives

Learning Objectives

Related questions