Basic question: How does short selling change the graph of cml and efficiency frontier graphically?

Goes from cornered graph to smooth efficient frontier. This is why you use the corner ptf theorem only when you’re constrained (no short sell). J.

could you describe the shape? is convexity gone? thx!

Take a look at this graph… Assume the line between the portfolio is straight… http://bit.ly/bhZXZO The correlation between corner portfolios is 1… Perfect Correlation…