10 Questions
Which type of risk does diversification eliminate according to Markowitz Portfolio Theory?
Systematic risk
What is the main purpose of diversification in investment portfolios?
To reduce variability of actual returns around expected returns
How does diversification affect undiversifiable risk?
It reduces undiversifiable risk to a minimum level
According to Markowitz Portfolio Theory, how can diversification be achieved?
By diversifying by asset classes
What does the Markowitz Model aim to provide tools for?
Identifying portfolio diversification
Which type of risk does diversification eliminate according to Markowitz Portfolio Theory?
Systematic risk
What is the primary focus of Markowitz Portfolio Theory?
Risk-return tradeoff
How does diversification impact the variability of actual returns around the expected returns?
It reduces the variability
What does diversification aim to eliminate in an investment portfolio?
Unsystematic risk
According to Markowitz Portfolio Theory, what type of risk can diversification reduce to an undiversifiable level?
Unsystematic risk
Test your knowledge of portfolio risk and return with this quiz covering topics such as Markowitz Model, diversification, measurement of risk and return, and the principles of creating an efficient investment portfolio. Check your understanding of essential concepts in portfolio theory and diversification strategies.
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