Markowitz's main contribution to portfolio theory is that risk is:
A) the same for each type of financial asset.
B) a function of credit, liquidity, and market factors.
C) not quantifiable.
D) influenced more by covariance than variance when portfolios are large.

Question

Quizplus · Accepted Answer

Markowitz's portfolio theory emphasizes that in large portfolios, the risk is more influenced by the covariance between asset returns rather than the variance of individual assets, as diversification reduces the impact of individual asset risk.

Markowitz's Main Contribution to Portfolio Theory Is That Risk Is