Category: popular

  • What is the market portfolio?

    What is the market portfolio?

    The market portfolio is the market value-weighted portfolio of all risky assets in an economy. In this post, we show how the market portfolio is equivalent to the optimal risky portfolio when all investors behave according to the modern portfolio theory. Learning objectives Understand the link between the optimal risky portfolio and the market portfolio. […]

  • The risk appetite of investors

    The risk appetite of investors

    How do investors differ in terms of their risk preferences? Are we all risk lovers? Or, do we prefer to avoid or minimize risk if we can? Perhaps our risk appetite is more dynamic. For instance, it may depend on the situation and our circumstances. In this post, we will elaborate on how financial economists […]