The capital market line (CML) is a graph that shows a portfolio's predicted return based on a set of risk levels. The portfolio standard error shows on the horizontal axis. The predicted rate of return is on the vertical axis.
Capital Market Line
L = Portfolio's standard deviation.
M = Market returns standard deviation
R = Standard deviation of R Portfolio
For a portfolio of risky assets, the CAL shows an optimal solution. CML usually includes a component of risk-free assets. The CAL is a curved frontier, whereas the risk-return expectation is linear.