Hello,

What is the relationship between the Capital Allocation Line (CAL), the Efficient Frontier and the indifference curve? Also, what does it mean when they intersect?

Our professor gave us this diagram, but I can't understand the relationship between them.

Thanks!

Expected Return {'36) Indifference Curve Set of Risky Assets .. i p KOptimal Risky Portfolio Optimal Complete Portfolio o 5 10 I 15 20 25 30 Standard Deviation ('56)