CAPM can trace its development from the insight which shows that the process of optimizing the return/risk ratio will ensure that every investor will invest in a portfolio of risk free asset and the risky market portfolio (also known as the two find separation theorem)

illustrate with a graph why no one will invest in other risky portfolios than the market portfolio.

Why would every tradable asset in the market be included in this market portfolio?

Answer rating: 100% (QA)

As per CAPM model one should invest in a risk free portfolio and risky portfolio Now this risky p... View the full answer