Markowitz's portfolio theory only holds for portfolios comprised of different combinations of two stocks.Therefore investors who create portfolios comprised of three or more stocks must disregard the theory.

Question

Quizplus · Accepted Answer

Markowitz's portfolio theory can be applied to portfolios comprised of any number of stocks, not just two. The theory considers the expected return and risk of the portfolio as a whole, as well as the correlation between the individual stocks in the portfolio.

Markowitz's Portfolio Theory Only Holds for Portfolios Comprised of Different