CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

According to the CAPM, the market portfolio ______
A. is exposed to both unsystematic and systematic risk.
B. includes all risky assets invested in equal amounts.
C. is perfectly positively correlated with other portfolios on the CML.
Explanation: The market portfolio is perfectly positively correlated with all other portfolios on the CML. All risky assets are included in the market portfolio in proportion to their market value, not in equal amounts. The market portfolio contains only systematic risk, since it is completely diversified.

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