The Markowitz Portfolio Approach was primarily developed for analyzing equity portfolios:
A)so it is of little use in evaluating currency portfolios.
B)but it can be used effectively in evaluating currency portfolios.
C)but it can be used to evaluate transaction exposure.
D)and it cannot be used to evaluate transaction exposure.

Question

Quizplus · Accepted Answer

While the Markowitz Portfolio Approach was developed for equity portfolios, it can also be effectively used in evaluating currency portfolios. In fact, it is commonly used in currency portfolio management to optimize the allocation of assets and minimize risk. However, it has limited applicability to evaluating transaction exposure, which involves measuring the impact of currency fluctuations on cash flows from existing contracts and transactions.

The Markowitz Portfolio Approach Was Primarily Developed for Analyzing Equity