Markowitz's main contribution to portfolio theory is:
A)that risk is the same for each type of financial asset
B)that risk is a function of credit,liquidity and market factors
C)risk is not quantifiable
D)insight about the relative importance of variance and covariance in determining portfolio risk

Question

Quizplus · Accepted Answer

Markowitz's primary contribution to portfolio theory is the insight that portfolio risk is less reliant on the risk of each individual asset, but instead on the variance and covariance of assets within the portfolio. This is known as the Modern Portfolio Theory and remains widely used today. Therefore, the best choice is D.

Markowitz's Main Contribution to Portfolio Theory Is