The curve represents all feasible portfolios combining US stocks and bonds. Its upper segment defines the efficient frontier: portfolios delivering the highest expected return (y-axis) for each risk level (x-axis), as formalized by Markowitz (1952). The Capital Market Line is drawn from the risk-free rate through the portfolio maximizing excess return per unit of risk. The Risk-Optimal Line originates at zero and identifies the fully invested portfolio maximizing return per unit of volatility. The Minimum Variance portfolio, delivering the lowest risk, is highlighted. For each portfolio, circles indicate asset composition: bonds in blue, stocks in red. 

Data: Parameters are derived from US total market returns and duration-adjusted US Treasury returns (5-year and 10-year). Monthly returns compounded from weekly data,  computed over 1975–2025. Risk-free rate from 3-month Treasury bills. Data from Kenneth R. French Data Library and Federal Reserve Economic Data (FRED).