One of the reasons that it is extremely difficult in practice to identify portfolios that are efficient is because

Question

Quizplus · Accepted Answer

The difficulty in identifying efficient portfolios arises mainly from the uncertainty and inaccuracy involved in estimating the expected return and standard deviation of a portfolio. While realized returns and required returns may also be subject to uncertainty and measurement error, the main concern is with estimating the parameters of the underlying asset returns that determine the portfolio's risk and return characteristics.

One of the Reasons That It Is Extremely Difficult in Practice