Markowitz's main contribution to the study of modern portfolio theory is:
A) that risk is best measured by subjective assessment.
B) that risk can be best measured for individual assets but has limited applications in portfolios.
C) risk while measured in the past is not quantifiable for use in the future.
D) the measurement of portfolio risk through the use of variance and covariance statistics.

Question

Quizplus · Accepted Answer

Markowitz's main contribution to modern portfolio theory is the concept of diversification, quantifying risk through the use of variance and covariance statistics. This approach allows for the assessment of the overall risk of a portfolio, not just the risk of individual assets, by considering how asset prices move in relation to one another.

Markowitz's Main Contribution to the Study of Modern Portfolio Theory