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Some assumptions of  Markowitz Portfolio Theory are said to be : (a)   Investors consider each investment alternative as being presented by a probability distribution of expected returns over some holding period. (b)   Investors estimate the return of the portfolio on the basis of the variability of expected Risk. (c)    Investors base decisions solely on expected return and risk, so their utility curves are a function of expected return and the expected variance (or standard deviation)of returns only. (d)   Investors minimize one-period expected utility, and their utility curves demonstrate diminishing marginal utility of wealth. a. B & C only b. B , C and D only c. All of the above d. A ,C and D only

Some assumptions of  Markowitz Portfolio Theory are said to be : (a)   Investors consider each investment alternative as being presented by a probability distribution of expected returns over some holding period. (b)   Investors estimate the return of the portfolio on the basis of the variability of expected Risk. (c)    Investors base decisions solely on expected return and risk, so their utility curves are a function of expected return and the expected variance (or standard deviation)of returns only. (d)   Investors minimize one-period expected utility, and their utility curves demonstrate diminishing marginal utility of wealth. a. B & C only b. B , C and D only c. All of the above d. A ,C and D only

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter6: Risk And Return
Section: Chapter Questions
Problem 1Q
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Some assumptions of  Markowitz Portfolio Theory are said to be :

(a)   Investors consider each investment alternative as being presented by a probability distribution of expected returns over some holding period.

(b)   Investors estimate the return of the portfolio on the basis of the variability of expected Risk.

(c)    Investors base decisions solely on expected return and risk, so their utility curves are a function of expected return and the expected variance (or standard deviation)of returns only.

(d)   Investors minimize one-period expected utility, and their utility curves demonstrate diminishing marginal utility of wealth.

a.

B & C only

b.

B , C and D only

c.

All of the above

d.

A ,C and D only

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