The theory that describes the behavior of individuals or firms administering large amounts of financial assets in search of the highest possible risk-adjusted net return is called
A) familiarity theory.
B) portfolio theory.
C) internalization theory.
D) none of the above

Question

Quizplus · Accepted Answer

This theory is known as portfolio theory or modern portfolio theory, which involves diversification of assets to minimize risk and maximize return on investment.

The Theory That Describes the Behavior of Individuals or Firms