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Modern Portfolio Theory

Modern-Portfolio-TheoryModern portfolio theory (MPT) is a popular theory which is extensively used in the finance world.It was proposed by  Harry Markowitz in the year 1952.This theory states that risk in the portfolio can be minimized by selecting securities with minimum risk.This theory also states  that higher return is directly proportional to the higher risk.

 

 

According to this theory portfolio construction consists of  four steps namely security valuation,asset allocation,portfolio optimization,performance measurement This theory is mostly used by risk averse investors,who want to play safe while investing in the stocks.

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About Emaad Qureshi