Quick Finance Tip – Capital Allocation Line (CAL) Formula

​The equation of the Capital Allocation Line will equal the Intercept plus the Slope.
 
Expected Return = Risk free rate + ((Expected Return – Risk Free)/standard deviation of the investment) * the standard deviation of the portfolio.
 
The intercept is the risk-free rate and the slope is the additional required rate of return per increases in risk. These increases in risk or known as market prices of risk.