What is the expected return on the market portfolio?
Three estimates and a confession
It is a common practice to proxy the stock market return with the S&P 500 index of blue-chip US equities. As a rough approximation, this is not too bad. But the stock market is actually considerably broader. The S&P 500 are neither 500 in number, nor the largest corporations by market capitalization; nor can the S&P 500 be held by investors in any stric…
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