The correct answer is: A. highest return for any given level of risk or the lowest risk for any given level of return.
The Markowitz model is a portfolio optimization model that helps investors identify the optimal portfolio of assets to maximize their expected return for a given level of risk. The model does this by creating a set of efficient portfolios, which are the portfolios that offer the highest return for any given level of risk or the lowest risk for any given level of return.
Option B is incorrect because the Markowitz model does not identify the least-risk portfolio for a conservative, middle-aged investor. The model identifies the efficient set of portfolios, which includes all portfolios that offer the highest return for any given level of risk or the lowest risk for any given level of return. The least-risk portfolio for a conservative, middle-aged investor may or may not be one of the efficient portfolios.
Option C is incorrect because the Markowitz model is not a long-run approach to wealth accumulation for a young investor. The model is a portfolio optimization model that helps investors identify the optimal portfolio of assets to maximize their expected return for a given level of risk. The model does not take into account the investor’s time horizon or risk tolerance.
Option D is incorrect because the Markowitz model does not offer a risk-free alternative for risk-averse investors. The model is a portfolio optimization model that helps investors identify the optimal portfolio of assets to maximize their expected return for a given level of risk. The model does not take into account the investor’s risk tolerance.