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.
E) only clients with whom she has established long-term relationships because she knows their personal preferences.

Question

Quizplus · Accepted Answer

The mean-variance theory, part of Modern Portfolio Theory, posits that investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. It is applicable to all investors regardless of their risk aversion level because it allows for the construction of portfolios anywhere on the efficient frontier, catering to both high and low-risk preferences.

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