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What are the assumptions sufficient to guarantee that the market portfolio is an efficient portfolio

What are the assumptions sufficient to guarantee that the market portfolio is an efficient portfolio

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Hey there are lot of assumptions involved that make the market portfolio the efficient portfolio

If their is a riskfree asset, the market portfolio needs to fall on the tangent that the SML makes on the efficient frontier. If there is no riskfree asset, it just needs to be on the efficient frontier.

No transaction cost , there are no taxes.

Investors can short any number of shares

There is perfect competition and no single investor can influence the price.

Investors make rational decisions based on risk and return.

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