Asked by Jasmine Trinidad on May 26, 2024
Verified
Portfolio theory as described by Markowitz is most concerned with
A) the elimination of systematic risk.
B) the effect of diversification on portfolio risk.
C) the identification of unsystematic risk.
D) active portfolio management to enhance returns.
Portfolio Theory
A framework for building an investment portfolio that aims to maximize returns by taking a specified amount of market risk.
Markowitz
Refers to Harry Markowitz, an economist known for his pioneering work in modern portfolio theory and investment diversification.
Systematic Risk
The type of risk inherent to the entire market or an entire market segment, also known as market risk, which cannot be eliminated through diversification.
- Gain an understanding of Markowitz portfolio theory and the concept of an optimal risky portfolio.
- Comprehend the idea of diversification and its influence on mitigating risk within a portfolio.
Verified Answer
Learning Objectives
- Gain an understanding of Markowitz portfolio theory and the concept of an optimal risky portfolio.
- Comprehend the idea of diversification and its influence on mitigating risk within a portfolio.
Related questions
Which Statement About Portfolio Diversification Is Correct ...
The Process of Eliminating Systematic Risk Through the Purchase of ...
Which One of the Following Is an Example of Diversifiable ...
The Principle of Diversification Tells Us That ...
Diversifiable Risks Can Be Essentially Eliminated by Investing in Several ...