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.

Question

Quizplus · Accepted Answer

Portfolio theory, as described by Markowitz, focuses on how diversification can reduce the overall risk of a portfolio. It does not aim to eliminate systematic risk (which is market-wide and cannot be diversified away) or specifically identify unsystematic risk, nor does it primarily concern itself with active management strategies to enhance returns.

Portfolio Theory as Described by Markowitz Is Most Concerned with