In capital market line, risk of efficient portfolio is measured by its

standard deviation
variance
aggregate risk
ineffective risk

The correct answer is A. standard deviation.

The capital market line (CML) is a line in the capital asset pricing model (CAPM) that shows the expected return of an efficient portfolio as a function of its beta. The CML is upward-sloping because investors are willing to accept a higher expected return for taking on more risk.

The standard deviation of a portfolio is a measure of its volatility. A portfolio with a higher standard deviation is more volatile and therefore riskier. The CML shows that investors are willing to accept a higher expected return for taking on more risk. Therefore, the CML is a line that shows the expected return of an efficient portfolio as a function of its risk, as measured by its standard deviation.

Variance is another measure of risk, but it is not as commonly used as standard deviation. Variance is simply the square of the standard deviation. Aggregate risk is the total risk of a portfolio, which is the sum of its systematic risk and its unsystematic risk. Ineffective risk is a type of risk that cannot be diversified away.

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