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.
E) none of these.

Question

Quizplus · Accepted Answer

Portfolio theory as described by Markowitz is most concerned with the effect of diversification on portfolio risk. It seeks to maximize returns while minimizing risk by selecting a mix of assets that are not perfectly correlated with each other. The aim is to reduce the unsystematic risk of individual stocks through diversification, rather than the elimination of systematic risk, identification of unsystematic risk or active portfolio management to enhance returns.

Portfolio Theory as Described by Markowitz Is Most Concerned With