Not only is the capital market line at a low level today in terms of return, but in addition a number of factors have conspired to flatten it. (This is important, because the slope of the line, or the extent to which expected return rises per unit increase in risk, quantifies the risk premium.) First, investors have fallen over themselves in their effort to get away from low-risk, low-return investments.... Second, risky investments have been very rewarding for more than twenty years and did particularly well in 2003. Thus, investors are attracted more (or repelled less) by risky investments
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