In Portfolio Analysis, We Often Use Ex Post (Historical) Returns

question 21

True/False

In portfolio analysis, we often use ex post (historical) returns and standard deviations, despite the fact that we are really interested in ex ante (future) data.

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Definitions:

Monopoly Powers

The ability of a single seller or company to control the market for a good or service, often resulting in limited competition.

Impossibility Theorem

A theory, often associated with economist Kenneth Arrow, stating that no rank-order voting system can simultaneously fulfill certain fairness criteria.

Paul Samuelson

An American economist known for his contributions to many areas of economic theory; the first American to win the Nobel Memorial Prize in Economic Sciences.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to negative externalities or a misallocation of resources.