Dictionary

The Capital Market Line (CML) is a graphical representation of the relationship between risk and return for an efficient portfolio of risky assets.

The Sharpe ratio is a financial ratio that measures the risk-adjusted return of an investment or a portfolio. It was developed by Nobel laureate William F. Sharpe.

The Capital Allocation Line (CAL) is a straight line that represents the trade-off between expected return and risk for a portfolio that consists of a risk-free asset and a risky portfolio.

The Efficient Frontier is a graph that represents the set of all possible portfolios that can be constructed from a given set of assets.

Capital allocation across risky and risk-free portfolios involves determining the optimal allocation of an investor's capital between a portfolio of risky assets and a risk-free asset .

Utility score of a portfolio is a measure of the overall satisfaction or happiness that an investor derives from the portfolio's performance, taking into account the investor's risk aversion and preferences.

Liquidity refers to a company's ability to meet its financial obligations as they come due.