The Markowitz Approach Does Not

question 22

Multiple Choice

The Markowitz approach does not

• A) require the forecast of an individual security's return.
• B) assume that all possible investments are risky.
• C) require the development of covariances.
• D) allow the investor to use borrowed money.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs.

Variable Cost Per Unit

The cost that varies directly with the level of production or sales volume; it increases as production increases and decreases as production decreases.

Selling Price Per Unit

The amount of money charged for each unit of a product or service.

Target Profit

The amount of profit that a company aims to make in a certain period.