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5 Assumptions to Markowitz Portfolio Theory

June 10, 2012
  1. Investors consider each investment alternative as being represented by a probability distribution of expected returns over some holding period.
  2. Investors maximize one-period expected utility and their utility curves demonstrate diminishing marginal utility of wealth.
  3. Investors estimate risk on basis of variability of expected returns.
  4. Investors base decisions solely on expected return and risk.
  5. Investors prefer higher returns to lower risk and lower risk for the same level of return.
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4 Comments
  1. I actually tend to agree with everything that ended up being written throughout Window Covers “5 Assumptions to Markowitz Portfolio Theory | CFA Flash Cards”.
    Thank you for all the facts.Regards-Charissa

  2. VAN TAIGO TZ permalink

    The work is well presented…

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