Question

In: Finance

12. What do we call the one portfolio that’s left over from all of Markowitz portfolios?

12. What do we call the one portfolio that’s left over from all of Markowitz portfolios?

Solutions

Expert Solution

Markowitz posits that the several assumptions in his theory e says that investors are rational andavoid the risk whenever possible there are no more enough investors to influence the market prices and the investors have the unlimited access to the borrowing and lending money at the free risk interest rate and it also has proved that the marketplace and the price and there are the huge number of the people effective where the investors do not have unlimited access to borrowing and lending of the money.

The portfolio has a number of different securities or other assets selected for the investment and the profit and the games whereas the portfolio also has a large number of investment risk.

and the primary objective of the portfolio theory and the management of the portfolio is only to maximize the gain and reduce the risk and potentially.and the risk can be reduced by adopting for selecting the best portfolio out of the alternative which have the the effective and the highest return for the risk.the portfolio selected should provide you the most satisfaction among the other alternative so it is good to choose the best portfolio from the alternative and then greatest will be the return on the risk taken.


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