Capital Allocation Line - CAL

AAA

DEFINITION of 'Capital Allocation Line - CAL'

A line created in a graph of all possible combinations of risky and risk-free assets. Also known as the "reward-to-variability ratio".

INVESTOPEDIA EXPLAINS 'Capital Allocation Line - CAL'

The graph displays to investors the return they can make by taking on a certain level of risk.

RELATED TERMS
  1. Capital Accumulation

    This refers to profits that a company uses to increase its capital ...
  2. Efficient Frontier

    A set of optimal portfolios that offers the highest expected ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that ...
  4. Modern Portfolio Theory - MPT

    A theory on how risk-averse investors can construct portfolios ...
  5. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  6. Risk

    The chance that an investment's actual return will be different ...
Related Articles
  1. Achieving Optimal Asset Allocation
    Investing Basics

    Achieving Optimal Asset Allocation

  2. Determining Risk And The Risk Pyramid
    Investing Basics

    Determining Risk And The Risk Pyramid

  3. 4 Steps To Building A Profitable Portfolio
    Mutual Funds & ETFs

    4 Steps To Building A Profitable Portfolio

  4. How To Outperform The Market
    Trading Strategies

    How To Outperform The Market

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center