- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 2. Portfolio Risk and Return: Part II
- Subject 1. Capital Market Theory
CFA Practice Question
According to capital market theory, the market portfolio, M, ______
II. is efficient.
III. is the preferred combination of risky assets for all investors.
I. contains all risky assets.
II. is efficient.
III. is the preferred combination of risky assets for all investors.
Correct Answer: I, II and III
Investors will agree on M but will disagree on how much M to combine with the risk-free asset.
User Contributed Comments 4
| User | Comment |
|---|---|
| aniketcpp | from (1) mean, whether it means that CML doesn't contains Risk free assets? |
| johntan1979 | Read the question properly... it's not talking about CML. |
| FozzeyBear | snarky johntan1979 once again |
| khalifa92 | point M in the CML exhibit is the point where the investor has invested 100% in the risky asset and 0% in the risk-free asset. referred to an efficient portfolio. |