Modern Portfolio Theory

Modern Portfolio Theory is a theory on exactly how risk-averse investors can easily construct portfolios for you to optimize or increase expected return according to a given higher level of market risk, emphasizing that risk is an inherent part connected with higher reward. Modern portfolio theory (MPT) can be a theory of financial that attempts to improve portfolio expected return to get a given amount connected with portfolio risk, or equivalently minimize risk to get a given level of expected return, by carefully picking out the proportions of varied assets.