The ____________ model allows the private views of the portfolio manager to be incorporated with market data in the optimization procedure.
A) Black-Litterman
B) Treynor-Black
C) Treynor-Mazuy
D) Black-Scholes

Question

Quizplus · Accepted Answer

The Black-Litterman model is designed to incorporate the private views of the portfolio manager along with the market equilibrium data (such as the expected returns based on the Capital Asset Pricing Model) in the portfolio optimization process. This helps in overcoming some of the unrealistic assumptions of traditional Markowitz portfolio theory by allowing for more realistic, personalized input.

The ____________ Model Allows the Private Views of the Portfolio