The market portfolio assumes
A) only the most efficient security is included.
B) at least 10 securities are included for diversification.
C) all securities are included.
D) only efficient securities are included.

Question

Quizplus · Accepted Answer

The market portfolio assumes that all securities are included in the portfolio. This means it includes every asset in the market, so it is a representation of the entire market. The market portfolio is considered the most efficient portfolio because it has the highest expected return for a given level of risk. Therefore, option C is the correct choice.

The Market Portfolio Assumes