The following table shows risk and return measures for two portfolios.
Portfolio
Average Annual Rate of Return
Standard Deviation
Beta
R
11%
10%
0.5
S&P 500
14%
12%
1.0
When plotting portfolio R on the preceding table relative to the SML, portfolio
R lies:
a. On the SML.
b. Below the SML.
c. Above the SML.
d. Insufficient data given.
When plotting portfolio R relative to the capital market line, portfolio R lies:
a. On the CML.
b. Below the CML.
c. Above the CML.