One of the Reasons That It Is Extremely Difficult in Practice

question 3

Multiple Choice

One of the reasons that it is extremely difficult in practice to identify portfolios that are efficient is because

• A) we cannot measure the realized return and the standard deviation of a portfolio with great accuracy.
• B) we cannot measure the expected return and the standard deviation of a portfolio with great accuracy.
• C) we cannot measure the weighted average return and the standard deviation of a portfolio with great accuracy.
• D) we cannot measure the required return and the standard deviation of a portfolio with great accuracy.

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits missed out on.

Tacos

A traditional Mexican dish consisting of a corn or wheat tortilla folded or rolled around a filling, such as beef, pork, chicken, or beans.

Burrito

A Mexican dish consisting of a rolled tortilla filled with various ingredients, typically including beans, cheese, meats, and vegetables.

Constant Rate

A fixed or stable rate that does not change over a specified period of time.