Portfolio Management Q82

0. XYZ is a portfolio on the capital market line. The returns on the market portfolio are greater than the returns on the portfolio XYZ. XYZ is most likely to be:

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Option : B
Explanation : Since the XYZ portfolio return is less than the market return, this implies that XYZ is a combination of the risk-free asset and the market portfolio. Owning the risk-free asset is essentially lending to the government. Thus, XYZ is a lending portfolio.

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