The Markowitz Model Is Based on Several Assumptions Regarding Investor

question 82

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 these are correct (that is, all are assumptions of the Markowitz model).