The market portfolio is most accurately described as:
A)The portfolio that follows market averages like the S&P/TSX or the S&P 500
B)The portfolio similar to the MSCI AC World index
C)The portfolio of all risky assets in the market
D)The portfolio of all assets including risk-free assets

Question

Quizplus · Accepted Answer

The market portfolio consists of all risky assets in the market, with each asset weighted according to its market value. The inclusion of risk-free assets would result in a portfolio that is not representative of the overall market. The portfolio may exhibit characteristics similar to market averages or indices, but these are not defining features of the market portfolio.

The Market Portfolio Is Most Accurately Described As