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.

---

Definitions:

Alcohol

An organic compound characterized by one or more hydroxyl (-OH) groups attached to a carbon atom.

Six-membered Ring

A term used in organic chemistry to describe cyclic compounds that consist of six atoms in their rings, with benzene being a prime example.

Hydrocarbon

A compound consisting entirely of hydrogen and carbon atoms.

Aromatic

Compounds containing one or more planar rings of atoms with delocalized π electrons, leading to enhanced stability.