All of the following are assumptions of the Markowitz model except
A) risk is measured based on the variability of returns.
B) investors maximise one-period expected utility.
C) investors' utility curves demonstrate properties of diminishing marginal utility of wealth.
D) investors base decisions solely on expected return and time.
E) all of the above

Question

Quizplus · Accepted Answer

The Markowitz model assumes that investors base their decisions on both expected return and risk (measured based on the variability of returns). It also assumes that investors maximise expected utility over a multi-period investment horizon and that their utility curves demonstrate properties of diminishing marginal utility of wealth. However, the model does not assume that investors base their decisions solely on expected return and time.

All of the Following Are Assumptions of the Markowitz Model