Without a risk-free asset in the hypothetical portfolio, the M² equals to A) +1. B) -1. C) Positive infinity. D) Negative infinity. E) 0.

Name: Without a risk-free asset in the hypothetical portfolio, the M 2 equals to A) +1. B) -1. C) Positive infinity. D) Negative infinity. E) 0.
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Quizplus · Accepted Answer

M² (Modigliani-Modigliani measure) requires a risk-free asset to compare the risk-adjusted performance of a portfolio to the market. Without a risk-free asset, M² cannot be calculated, effectively making it zero.

Without a Risk-Free Asset in the Hypothetical Portfolio, the M2

Without a Risk-Free Asset in the Hypothetical Portfolio, the M²