Why does the market portfolio include all risky assets?

1 answer:

6 0

Under the CAPM, all investors hold the market portfolio because it is the optimal risky portfolio. Because it produces the highest attainable return for any given risk level, all rational investors will seek to be on the straight line tangent to the efficient set at the steepest point, which is the market portfolio. Branliest would be nice (:

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1 & 2. Autarky refers to a situation where a country does not engage in trade with other countries but rather relies on its own production capacities to feed the consumption in the country.

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