Which of the Following Is Not One of the Assumptions

question 29

Multiple Choice

Which of the following is not one of the assumptions of portfolio theory?

• A)Liquidity of positions
• B)Investor preferences are based only on expected return and risk
• C)Low transactions costs
• D)A single investment period

---

Definitions:

Behavioral Perspective

An approach to psychology that focuses on observable behaviors and the ways in which they are learned.

Observable Responses

Measurable actions or reactions of an organism in response to external or internal stimuli.

Conscious Processes

Mental activities of which an individual is aware, involving perception, thinking, and remembering.

Hindsight Bias

The tendency to believe, after learning an outcome, that we would have foreseen it. (Also known as the I-knew-it-all-along phenomenon.)