Which of the following is not an assumption of Modern Portfolio Theory?
A) Investors are risk averse.
B) Investors are rational decision makers.
C) Risk comes from not knowing what you are doing.
D) Investors' preferences are based on a portfolio's expected return and risk.

Question

Quizplus · Accepted Answer

Modern Portfolio Theory (MPT) assumes that investors are risk averse, rational, and make decisions based on the expected return and risk of their portfolios. It does not assume that risk comes from not knowing what you are doing; instead, it quantifies risk in terms of the variability of returns.

Which of the Following Is Not an Assumption of Modern