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what is the incorrect MPT assumption? The MPT dictates that investors will select portfolios demonstrated by the theory, encompassing all possible combinations of risky assets
what is the incorrect MPT assumption?
The MPT dictates that investors will select portfolios demonstrated by the theory, encompassing all possible combinations of risky assets available in the market.
The MPT assumes that the market is frictionless.
The MPT is built on the assumption that investors are riskneutral.
There are limitations in applying Modern Portfolio Theory MPT to create an efficient portfolio due to the reality that asset returns can be skewed or exhibit fat tails.
The MPT shows that diversification can reduce portfolio risk without necessarily diminishing expected returns.
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