Which statement is true regarding the market portfolio?I) It includes all publicly traded financial assets.II) It lies on the efficient frontier.III) All securities in the market portfolio are held in proportion to their market values.IV) It is the tangency point between the capital market line and the indifference curve.
A) I only
B) II only
C) III only
D) IV only
E) I, II, and III

Question

Quizplus · Accepted Answer

The market portfolio conceptually includes all publicly traded financial assets, lies on the efficient frontier (representing the most efficient portfolio of assets), and all securities within it are held in proportion to their market values. The capital market line (CML) is tangent to the efficient frontier at the market portfolio, but not to an individual's indifference curve, which represents their risk-return preferences.

Which Statement Is True Regarding the Market Portfolio?I) It Includes