Which statement is not true regarding the market portfolio?
A)It includes all publicly-traded financial assets.
B)It lies on the efficient frontier.
C)All securities in the market portfolio are held in proportion to their market values.
D)It is the tangency point between the capital market line and the indifference curve.

Question

Quizplus · Accepted Answer

The statement "It is the tangency point between the capital market line and the indifference curve" is not true. The market portfolio is simply the portfolio of all financial assets in the market, held in proportion to their market values. The tangency point between the capital market line and the indifference curve is the optimal portfolio for an investor given their risk preferences and available assets.

Which Statement Is Not True Regarding the Market Portfolio