A manager who uses the mean-variance theory to construct an optimal portfolio will satisfy
A)investors with low risk-aversion coefficients.
B)investors with high risk-aversion coefficients.
C)investors with moderate risk-aversion coefficients.
D)all investors regardless of their level of risk aversion.

Question

Quizplus · Accepted Answer

The mean-variance theory, part of Modern Portfolio Theory, posits that an optimal portfolio can be constructed that maximizes return for a given level of risk or minimizes risk for a given level of return. This approach is applicable to all investors, regardless of their level of risk aversion, because it focuses on the efficient frontier of optimal portfolios that offer the best possible expected return for a given level of risk. Each investor, based on their risk aversion, can select a point along this frontier that best matches their preference, making the theory versatile for all types of investors.

A Manager Who Uses the Mean-Variance Theory to Construct an Optimal