Modern Portfolio Theory

Business / Taxes / Modern Portfolio Theory: In making investment decisions, adherents of modern portfolio theory focuses on potential return in relation to potential risk. The strategy is to evaluate and select individual securities as part of an overall portfolio rather than solely for their own strengths or weaknesses as an investment. Asset allocation is a primary tactic according to theory practitioners. That's because it allows investors to create portfolios to get the strongest possible return without assuming a greater level of risk than they are comfortable with. Another tenet of portfolio theory is that investors must be rewarded, in terms of realizing a greater return, for assuming greater risk. Otherwise, there would be little motivation to make investments that might result in a loss of principal.

Other Words for Modern

Modern Adverb Synonyms: up to date, current, contemporary, today's, new, fresh, novel, brand-new, up to the minute, present-day, latest, new-fashioned, newfangled, modish, in vogue, fashionable, in fashion, stylish, in style, chic, flavor of the month
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Portfolio

Business / Finance / Portfolio: A collection of investments, real and/or financial. MORE

Portfolio Manager

Business / Finance / Portfolio Manager: Used in the context of general equities. Professional responsible for the securities portfolio of an individual or institutional investor, such as a mutual fund, pension fund, profit-sharing plan, ban MORE

Portfolio Opportunity Set

Business / Finance / Portfolio Opportunity Set: The expected return/standard deviation pairs of all portfolios that can be constructed from a given set of assets. MORE

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