In practice, the market portfolio is often represented by:
A)A portfolio of U.S.Treasury securities
B)A diversified stock market index
C)An investor's mutual fund portfolio
D)The historic record of stock market returns

Question

Quizplus · Accepted Answer

The market portfolio is typically represented by a diversified stock market index such as the S&P 500 or the Wilshire 5000 Total Market Index. This is because these indices contain a broad representation of the overall stock market, providing a snapshot of the performance of the entire market rather than just one segment of it. Treasury securities and an investor's mutual fund portfolio are unlikely to represent the market portfolio as a whole, and historical records of stock market returns do not represent an actual investment opportunity.

In Practice, the Market Portfolio Is Often Represented By