Modern Portfolio Theory Is

question 87

Multiple Choice

Modern portfolio theory is

• A) a concept and procedure for combining securities into a portfolio to minimize risk.
• B) a concept and procedure for combining securities into a portfolio to maximize return.
• C) a concept and procedure for combining securities into a portfolio to maximize volatility.
• D) a concept and procedure for combining securities into a portfolio to maximize dollar return.

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Definitions:

Marginal Tax Rates

The percentage of tax applied to your income for each tax bracket in which you qualify, signifying the rate at which your last dollar of income is taxed.

Residual Value

The estimated value of an asset at the end of its useful life, reflecting what it could be sold for or its salvage value.

Lessor

An entity or individual that leases or rents property or assets to a lessee.

Lessee

The entity that obtains the right to use an asset under a lease agreement from the lessor.