Markowitz built a diversified portfolio model that assumed that the portfolio structure would be located on the frontier point that would yield maximum utility.
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2.
To deviate from the structure of the market portfolio was assumed to involve assuming an extra increment of risk for no matching incremental improvement in reward.
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3.
The CAPM theory assumed that the portfolio would hold an amount of risk free assets plus it would embrace all risky assets weighted by their market capitalization.