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1. Portfolio theory defines risky investments in 2 ways expected returns and variance ( Standard deviation)...

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Finance

1. Portfolio theory defines risky investments in 2 ways expectedreturns and variance ( Standard deviation) of expected returns.What assumptions need to be made about investors and the expectedinvestment returns in this 2 factor approach and state if they arejustified in real life.

2. What can be said about the portfolio that is represented byany point along the efficient frontier of risky investmentportfolios?

3. What is meant by two fund separation? 4. The capital assetpricing model tells us that a security with a beta of 2 will beexpected to yield a return twice that of a security whose beta is1. Is this statement true?

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Portfolio theory of Markowitz defines risky investment for investors in two ways and the assumptions for it are Investors are rational and they behave in a manner as that to maximize their return on the given income Investors have free access    See Answer
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