The theory of portfolio allocation describes
A)why savers behave as they do when selecting one asset rather than another.
B)the relationship among interest rates on bonds of different maturities.
C)why firms sometimes raise funds by issuing equities and sometimes by issuing debt.
D)the reasons why assets differ in their degree of liquidity.

Question

Quizplus · Accepted Answer

The theory of portfolio allocation explains how individuals and investors choose to allocate their wealth among different assets based on their return expectations, risk tolerance, and other factors. It helps to understand their behaviors in selecting one asset rather than another.

The Theory of Portfolio Allocation Describes