If you created a graph with investment risk on the x-axis and investment return on the y-axis and plotted points for two different investments, would a line going through the points be positively sloped, negatively sloped, or have a slope of zero?
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It depends on whether you are being adequately rewarded for the amount of relative risk that is being taken in the two investments: the first condition, yes; the second and third conditions, no. You may also want to consider performance with respect to the capital markets line.