In practice, the market portfolio is often represented by:
A)a portfolio of Canadian 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 represents the overall investment market and is typically represented by a diversified stock market index, such as the S&P 500 or the Dow Jones Industrial Average. This is because these indices provide a broad representation of the overall market and include a variety of different industries and company sizes. Canadian Treasury securities, an investor's mutual fund portfolio, and the historic record of stock market returns may not provide as accurate a representation of the overall market.

In Practice, the Market Portfolio Is Often Represented By