- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 63. Portfolio Risk and Return: Part II
- Subject 3. The Capital Asset Pricing Model
CFA Practice Question
Which of the following statements is least likely to be an assumption about investor behaviour underlying the Markowitz model?
A. Investors maximize one-period expected return.
B. Investors base their decisions solely on expected return and risk.
C. Investors have utility curves that are a function of expected returns and variance.
Explanation: Investors maximize one-period expected utility, and their utility curves demonstrate diminishing marginal utility of wealth.
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