Modern Portfolio Theory – Basics

MPT is based on the behavior of the investor. The investor may make decision based on the expected return and the riskiness of returns. The higher the level of fluctuations, the higher is the risk. Therefore an investor may not prefer a share having higher level of fluctuations price.  He may prefer a share even …

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Modern Portfolio Theory

Modern Portfolio Theory   There are two explanations which preserve the integrity of earlier and more theoretical discussions of risk and return. First, as was explained in the last article, according to modern portfolio theory, the risk premium of an individual asset is not measured by its own variability considered in isolation but rather by the contribution …

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