[Verse 1] Picture Sarah with her savings, wants to grow her wealth today She could buy some Treasury bonds, guaranteed but meager pay Or she might choose risky stocks, volatile but high reward How to blend these two together? That's what we'll explore [Chorus] Capital Allocation Line, CAL shows the way Mix your safe and risky assets, find your perfect play Capital Market Line, CML's the best When the market portfolio meets the risk-free test Draw the line from zero risk to maximum return CAL and CML, that's the lesson we must learn [Verse 2] Take that risk-free Treasury rate, plot it on the left side clean Draw a line that stretches upward to your risky asset dream Every point along this pathway shows a different allocation More bonds means lower profits, stocks bring wild fluctuation [Chorus] Capital Allocation Line, CAL shows the way Mix your safe and risky assets, find your perfect play Capital Market Line, CML's the best When the market portfolio meets the risk-free test Draw the line from zero risk to maximum return CAL and CML, that's the lesson we must learn [Bridge] Steepest slope means best reward per unit risk you take Tangent point reveals the secret, optimal choice to make When your risky asset matches market portfolio's blend CAL becomes the mighty CML, the golden standard's trend [Verse 3] Every investor gets the same line when they use the market basket Risk-free rate plus market premium, that's the perfect packet Leverage up or dial it down, slide along that perfect slope Efficient frontier's envelope gives every saver hope [Chorus] Capital Allocation Line, CAL shows the way Mix your safe and risky assets, find your perfect play Capital Market Line, CML's the best When the market portfolio meets the risk-free test Draw the line from zero risk to maximum return CAL and CML, that's the lesson we must learn [Outro] From Treasury bills to market thrills Your allocation line reveals The perfect mix for every risk CAL and CML
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