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Answer each question below as clearly and succinctly as you can.

a. Explain the difference between the Security Market Line (SML) and the Capital Market Line (CML).

b. The treasury department of a large Fortune 500 corporation would like to estimate the company’s cost of capital in order to make capital budgeting decisions. Should they use the SML or the CML? Explain.

c. The new treasurer of a large, east coast university in interested in evaluating whether the university’s endowment portfolio has been effectively managed. Should she compare its performance to the CML or the SML? Why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91779100

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