Compare asset portfolios

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The Capital Asset Pricing Model (CAPM) shows that the slope of the "Capital Market Line" is equal to the Sharpe Ratio of the optimal stock portfolio. What exactly is the Sharpe Ratio and how do you interpret that figure? How would we use the Sharpe Ratio to compare asset portfolios? What happens to the Sharpe Ratio as the risk-free rate increases?

Reference no: EM132825972

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