A portfolio optimization model used to construct a portfolio that minimizes risk subject to a constraint requiring a minimum level of return is known as
A)a capital budgeting pricing model.
B)a market share optimization model.
C)the Hauck maximum variance portfolio model.
D)the Markowitz mean-variance portfolio model.

Question

Quizplus · Accepted Answer

The Markowitz mean-variance portfolio model is a commonly used optimization model to construct portfolios that aim to minimize risk while achieving a desired level of return. This model considers the expected returns and standard deviations of each asset in the portfolio, as well as the correlations between them. The model then constructs an efficient frontier, which represents the set of portfolios with the lowest possible risk for each level of expected return. The portfolio selected would be one that falls on this efficient frontier and meets the minimum required level of return constraint.

A Portfolio Optimization Model Used to Construct a Portfolio That