 In this section, I will explain the concept of capital market line. So, we have been talking a lot about the capital allocation line. So, capital market line is a special type of capital allocation line. And what is special in this, I am going to explain. So, capital market line, which we abbreviate as CML, this is the line which gives you the optimal combination of risk and return. So, this is CAL, capital allocation line. But that capital allocation line, which defines optimum risk, return, combinations, that particular capital allocation line is termed as capital market line. So, when we talked about the point of tangency of capital allocation line and efficiency of the frontier, on that particular point of tangency capital allocation line, you were getting the optimal combination. On that particular capital allocation line, we call it capital market line. So, it is a capital allocation line. But what is special in that, that is, it is that specific capital allocation line on which optimal combination of risk and return is kept. So, it is a special case of capital allocation line and what is the speciality of this? The speciality is that the slope of CML is the sharp ratio. We have discussed it. What is sharp ratio? Sharp ratio of the market portfolio. So, I am going to further explain it. K, CML's slope, sharp ratio. When we are talking about it, what does it mean? So, when we look at the intercept point of CML and the efficiency frontier, we have said that this is the capital allocation line where the point of tangency will be obtained from the efficiency frontier. And that particular slope is equivalent to the sharp ratio. Now, if we are talking about any point that falls below CML, whatever you have below CML, the combination of risk assets, the combination of risk pre-asset will not be optimal. They will not give you the best combination of risk and reward. Only the same points that follow CML, they will be able to give you the optimal allocation of the different types of available assets in which you want to invest. Now, I was talking to you about the sharp ratio. So, if we look at the CML's formula, we can see that CML's formula can be given by this relationship and the intercept in this is risk pre-return and the sharp ratio is the slope of the case. So, you can see that it is the difference between expected market return minus risk pre-return divided by the standard deviation of the market return. So, from this particular value, you can know what is the slope of the case and what is the intercept. And from this, you will get that capital allocation line on which you get the point of tangency eventually and you get the optimal allocation between risk and reward. And therefore, we are calling that specific CEL as the CML that can be termed as or that can be expressed as the capital market line. Now, if we look at, if we deliberate further on the slope of CML, that is basically the risk premium which you are going to get on the market portfolio divided by its standard deviation. So, what do you mean by the risk premium? That if I am investing in a risk-free asset and if I get 6% return from there and I am investing in a risky asset, then to take the risk, the return I want to get on it should be more than 6% in every condition. Now, the more risks there are, which we admire from CICMA, the more risks there are, the more I will expect the premium of the risk. I would like to say that the more chances of my money going down, the more I would expect, I would like to have a higher return because I am taking a higher risk. So, the higher return, minus risk-free return, we call that particular difference as risk premium. That I should get the benefit of which I want to take a big level of risk in a certain investment. Now, if we look at the diagram of the capital market line or the graph of the capital market line, it is the combination of the best possible combinations of the risk-free and the risky assets together. It will always start from RF. RF is the intercept and its slope will always be equal to the sharp ratio. And in the sharp ratio, I have told you that the risk premium divided by the standard deviation of the market portfolio. So, you have defined that and according to that, you will have the capital market line. And if you try to understand the capital market line further, you can see that there are many capital allocation lines such as CAL suppose CAL 1 CAL 2 many different combinations of total investment which you want to make CAL 3 but this is CAL which we will call capital market line eventually on which your optimal combination sits. So, therefore we call this as the capital market line.