When selecting a portfolio of potential investment opportunities, it is argued that if a risk free asset is available and assets that any investor can choose (so called ‘input list’) are identical, all investors will choose the same portfolio on the efficient frontier of risky assets (Bodie, Kane and Marcus, 2011). Explain and critically evaluate the above statement.

When selecting a portfolio of potential investment opportunities, it is argued that if a risk free asset is available and assets that any investor can choose (so called ‘input list’) are identical, all investors will choose the same portfolio on the efficient frontier of risky assets (Bodie, Kane and Marcus, 2011).
You are asked to:
1. Explain and critically evaluate the above statement,
2. Discuss whether investors do this in reality, use evidence to support your answer.

Posted in Uncategorized