What component is essential to determine the cost of a real portfolio?

To determine the cost of a real portfolio, the execution price is essential because it reflects the actual price at which securities are bought or sold during a trade. The execution price incorporates all market factors at the time the transaction occurs, providing a precise measure of the cost incurred for acquiring or disposing of assets. This is crucial because the execution price may vary from market quotes due to factors such as market volatility and liquidity conditions at the time of the trade.

In contrast, while the price when the order is made can provide an indication of market conditions, it does not account for potential fluctuations that may occur before the execution takes place. Trading commissions are important for understanding the overall transaction cost but do not represent the price at which the assets were traded. Market capitalization of shares provides insights into the size and stability of a company but is not directly related to the cost of purchasing those shares in a portfolio context. Therefore, the execution price is the key component for accurately determining the total cost of a real portfolio.