Modern portfolio theory and traditional portfolio management may both result in highly diversified portfolios.

Question

Quizplus · Accepted Answer

Both modern portfolio theory (MPT) and traditional portfolio management strategies can lead to the creation of highly diversified portfolios. MPT focuses on optimizing the portfolio by balancing risk and return, often resulting in a diversified portfolio to mitigate risk. Traditional portfolio management also values diversification as a means to reduce risk, although it may follow different principles and analyses to achieve this goal.

Modern Portfolio Theory and Traditional Portfolio Management May Both Result