Practice Quiz

FRM Financial Risk Manager Practice Test

Category - The Mean-Variance Portfolio Theory

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A portfolio is a collection of investments made by individuals or institutions. The market portfolio then is:
  1. A collection of investments into a specific market.
  2. A collection of all securities where the amount invested in each security is proportional to its relative market value.
  3. A collection of all securities available in a specific market and the amount invested is the same for every security.
  4. A collection of all investments in a whole economy.
Explanation
A collection of all securities where the amount invested in each security is proportional to its relative market value.

Key Takeaway: Index funds are examples of market portfolios that are highly efficient for investing.
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