Mutual Fund Theorem and Its Implications

Mutual Fund Theorem and Its Implications

Highlights: Investors allocate their risky investments in a single market-index or mutual fund. The theorem simplifies portfolio selection by reducing the need for complex diversification. It aligns with the Capital Asset Pricing Model (CAPM) framework for optimal investment. Mutual Fund Theorem is a fundamental concept in financial economics, closely associated with the Capital Asset Pricing Model (CAPM). It asserts that all investors, regardl…

Slovaks still put a lot of confidence in bonds when investing. This was confirmed, for example, a month ago in the case of two state retail issues, which picked up in a few days. In addition, corporate bonds are also extremely popular with our citizens, but they are fundamentally different from government bonds. This is a significantly higher level of risk, as private issuers cannot guarantee a return on investment like states with a monopoly on…