Quick Finance Tip – Capital Market Line and Capital Allocation Line Difference

​Capital Allocation Line is the combination of the risk-free rate and risky portfolio, which varies from person to person, contingent on their risk preference. Moving to the Capital Market Line, the difference lies in the combination of the risk-free rate and risky portfolio, that is the same for each person (homogeneity of expectations). Theoretically, any point above the Capital Market Line is not achievable.