All of the Following Are Assumptions of the Markowitz Model

question 56

Multiple Choice

All of the following are assumptions of the Markowitz model EXCEPT

• A) risk is measured based on the variability of returns.
• B) investors maximize one-period expected utility.
• C) investors' utility curves demonstrate properties of diminishing marginal utility of wealth.
• D) investors base decisions solely on expected return and time.
• E) there are no tax costs involved.

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Definitions:

Human Combustion

A supposed phenomenon where a human body allegedly catches fire and burns as a result of internal chemical reactions, without an external source of ignition.

Percolation

The process of a liquid slowly passing through a filter or porous substance, often used in the context of water movement through soil.

Groundwater

Water stored underground in soil and crevasses, or an aquifer

Evaporation

The process by which a liquid turns into vapor, typically under the effect of heat.