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.
E)All of the above are true.

Question

Quizplus · Accepted Answer

The statement "It is the tangency point between the capital market line and the indifference curve" is not true regarding the market portfolio. The market portfolio is the portfolio of all 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, which may or may not be the market portfolio depending on their risk and return preferences.

Which Statement Is Not True Regarding the Market Portfolio