Which of the Following Is True About the Market Portfolio

question 361

Multiple Choice

Which of the following is true about the market portfolio?

• A) The expected return of the market portfolio determines the slope of the security market line.
• B) It plots below the security market line.
• C) It has a beta equal to zero.
• D) It consists of all the stocks on the TSX.
• E) It has a different reward to risk ratio than the individual assets in the market.

---

Definitions:

Existing Businesses

Companies or enterprises that have been operational for a period of time and are not newly established.

Franchises

Business models where individuals can buy the rights to open and operate a location of a larger company.

Capital Intensive

A characteristic of businesses that require large investments in capital assets, like machinery and equipment, to produce goods or services.

Labor Intensive

Describes a process or industry that requires a large amount of labor to produce its goods or services, compared to the amount of capital used.