All of the following are assumptions of the Markowitz model except Risk is measu
ID: 2736832 • Letter: A
Question
All of the following are assumptions of the Markowitz model except
Risk is measured based on the variability of returns.
Investors maximize one-period expected utility.
Investors' utility curves demonstrate properties of diminishing marginal utility of wealth.
Investors base decisions solely on expected return and time.
All of the above
Risk is measured based on the variability of returns.
Investors maximize one-period expected utility.
Investors' utility curves demonstrate properties of diminishing marginal utility of wealth.
Investors base decisions solely on expected return and time.
All of the above
Explanation / Answer
ALL OF THE FOLLOWING ARE ASSUMPTIONS OF THE MARKOWITZ MODEL EXCEPT INVESTORS BASE DECISIONS SOLELY ON EXPECTED RETURN AND TIME.
THE ACTUAL ASSUMPTION IS INVESTORS BASE DECISIONS SOLELY ON EXPECTED RETURN AND RISK.