INFLATION AND OPTIMAL PORTFOLIO CHOICES.

The article discusses the influence of uncertainty or inflation on mean-variance equilibrium that will prove that the market portfolio is nonefficient. The author claims that the paper addresses theoretical issues involving multivariate analysis of nominal returns in a situation where investors are concerned with real wealth optimization. The author suggests that if inflation does have an impact on asset returns, then the consideration of capital asset pricing models cannot yield a perfect or positive answer. The article addresses portfolio efficiency and special cases of a nominal riskfree asset.