In theory, which of these is a combination of securities that places the portfolio on the efficient frontier and on a line tangent from the risk-free rate?
A)Efficient market
B)Market portfolio
C)Probability distribution
D)Stock market bubble

Question

Quizplus · Accepted Answer

The combination of securities that places the portfolio on the efficient frontier and on a line tangent from the risk-free rate is the market portfolio. This portfolio offers investors the highest possible return for a given level of risk and is seen as the optimal portfolio in modern portfolio theory. Efficient market refers to the idea that asset prices reflect all available information, probability distribution is a mathematical function that describes the likelihood of different outcomes, and a stock market bubble is an unsustainable increase in the price of stocks.

In Theory, Which of These Is a Combination of Securities