The expected return of the market portfolio is equal to the market risk premium.

Name: The expected return of the market portfolio is equal to the market risk premium.
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Question

Quizplus · Accepted Answer

The expected return of the market portfolio includes the risk-free rate, while the market risk premium is the additional return that investors expect to receive for taking on the risk of investing in the market. Therefore, the two are not equal.

The Expected Return of the Market Portfolio Is Equal to the Market