What is a Markowitz efficient portfolio?
What is a Markowitz efficient portfolio?
Markowitz efficient portfolio. Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk.
What is it mean by Markowitz efficient frontier?
Markowitz efficient frontier. The graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk.
What did modern Loan portfolio Theory Harry Markowitz say?
Markowitz argued that investors could achieve their best results by choosing an optimal mix of the two based on an assessment of their individual tolerance to risk.
What are the assumptions of the Markowitz model?
The Portfolio Theory of Markowitz is based on the following assumptions: (1) Investors are rational and behave in a manner as to maximise their utility with a given level of income or money. (2) Investors have free access to fair and correct information on the returns and risk.
What is high risk aversion?
The term risk-averse describes the investor who chooses the preservation of capital over the potential for a higher-than-average return. A high-risk investment may gain or lose a bundle of money.
When did Markowitz win Nobel Prize?
1990
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1990.
What is Harry Markowitz known for?
Markowitz is a professor of finance at the Rady School of Management at the University of California, San Diego (UCSD). He is best known for his pioneering work in modern portfolio theory, studying the effects of asset risk, return, correlation and diversification on probable investment portfolio returns.
Why the efficient frontier must be concave?
The efficient frontier is a curved line. It is because every increase in risk results in a relatively smaller amount of returns. In other words, there is a diminishing marginal return to risk, and it results in a curvature.
