The Markowitz Model Is Based on Several Assumptions Regarding Investor

question 5

Multiple Choice

The Markowitz model is based on several assumptions regarding investor behavior.Which of the following is not such any assumption?

• A) Investors consider each investment alternative as being represented by a probability distribution of expected returns over some holding period.
• B) Investors maximize one-period expected utility.
• C) Investors estimate the risk of the portfolio on the basis of the variability of expected returns.
• D) Investors base decisions solely on expected return and risk.
• E) None of the above (that is, all are assumptions of the Markowitz model)

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