You estimate that a passive portfolio, for example, one invested in a risky portfolio that mimics the S&P 500 stock index, offers an expected rate of return of 13% with a standard deviation of 25%. You manage an active portfolio with expected return 18% and standard deviation 28%. The risk-free rate is 8%.

Draw the CML and your funds CAL on an expected returnstandard deviation diagram.

What is the slope of the CML?

In a few sentences, characterize what the advantage of your fund over the passive fund would be.