Capital market line (CML)

Definition:

The line defined by every combination of the risk-free asset and the market portfolio. The line represents the risk premium you earn for taking on extra risk. Defined by the capital asset pricing model.

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Measurement error

Errors in measuring an explanatory variable in a regression, which leads to biases in estimated parameters.

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