According to the nonsatiation assumption in the Markowitz theory, investors always prefer portfolios with the higher levels of terminal wealth because
A) they allow the investor to spend more on future consumption
B) the investor will choose the portfolio with the smaller risk
C) diminishing marginal utility makes them risk averse
D) they allow investors to save more in the present period

Question

Quizplus · Accepted Answer

The nonsatiation assumption in the Markowitz theory states that investors always prefer portfolios with the higher levels of terminal wealth because it allows the investor to spend more on future consumption. This assumption is based on the belief that investors prefer more consumption to less and that there is no such thing as too much consumption.

According to the Nonsatiation Assumption in the Markowitz Theory, Investors