Recent thinking in theoretical finance grapples with the issue of risk and return for combinations of stocks. This theory is called:

A) portfolio theory.
B) expectations theory.
C) efficient market theory.
D) All of the above

Theoretical Finance

A field of finance that seeks to understand and model the behavior of financial markets through mathematical and statistical methods.

Portfolio Theory

This is an investment theory which proposes how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk.

Efficient Market

A financial market theory stating that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the average market return.