Tangent Portfolio
The tangent portfolio is the portfolio of risky assets on the efficient frontier that, when combined with a risk-free asset, yields the Capital Market Line with the steepest slope; it has the highest Sharpe ratio for the given risk-free rate.
Example: A portfolio manager identifies the tangent portfolio as the mix of risky assets that, when combined with the risk-free asset, yields the steepest Capital Market Line given the current risk-free rate.
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