Which of the Following Is Not True Regarding Markowitz Portfolio

question 44

Multiple Choice

Which of the following is not true regarding Markowitz portfolio theory? The Markowitz model:

• A) is considered a three-parameter model.
• B) implies that no portfolio on the efficient frontier dominates any other portfolio on the efficient frontier.
• C) is cumbersome to work with due to the large variance-covariance matrix needed for a set of stocks.
• D) generates an entire set, or efficient frontier, of portfolios.

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Definitions:

Reserve

Assets held back or saved for future use or to meet unforeseen needs, often referring to banks' reserves of cash.

Demand Deposits

Money in bank accounts that can be withdrawn "on demand" without any advance notice.

Junk Bonds

High-yield bonds that carry a higher risk of default compared to investment-grade bonds, typically issued by companies with lower credit ratings.

Real Estate Loans

Loans specifically provided for purchasing property, including both residential and commercial properties.