Market Portfolio really, market, assets

JustasS

I know this is a really fundamental concept and i'm kind of late to ask it...

Does the market portfolio consist of all risky assets

*equally weighted?
*or weighted based on market value?

Mechanic

It's not equally weighted. Easier way to remember is everything is "market" in a market portfolio.

evolsteevol

waldziuchna Wrote:
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> It is perfectly diversified so it can't be equally
> weighted.


Do you mean equally weighted portfolios can never be perfectly diversified?

JGovender

alpha/nonsystematic variance of the security- the weight in well diversified portfolio should be proportional to this "information ratio". I think that it can hapen that the best choice would be to diversifie by adding securities in equal proportions but when it goes to the market portfolio it is highly unlikely. But still it is only my opinion.

btcapital

Thanks People!

bluejazzy

sgupta0827 Wrote:
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> It's not equally weighted. Easier way to remember
> is everything is "market" in a market portfolio.


everything except the risk free asset