Capital allocation line (Ofer Abarbanel online library)

Capital allocation line (CAL) is a graph created by investors to measure the risk of risky and risk-free assets. The graph displays the return to be made by taking on a certain level of risk. Its slope is known as the “reward-to-variability ratio“.[1]

References

  1. ^http://www.investopedia.com/terms/c/cal.asp
  2. ^http://thismatter.com/money/investments/capital-allocation.htm
  3. ^Sharpe, William. “Mutual Fund Performance” (PDF). The Journal of Business. vol.39, no.1 , pt 2: 119-138.

 

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