This Is the Concept and Procedure for Combining Securities into a Portfolio

question 105

Multiple Choice

This is the concept and procedure for combining securities into a portfolio to minimize risk.

• A) firm specific theory
• B) modern portfolio theory
• C) optimal portfolio theory
• D) total portfolio theory

---

Definitions:

Normal Model

A statistical model that assumes the data follow a normal (Gaussian) distribution.

Cutoff Value

A specific point on the scale of measurement that separates data into distinct classes or groups.

Car Speeds

The rates at which an automobile travels, typically measured in miles per hour or kilometers per hour.

Mean (μ)

A statistical measure, represented by the symbol μ, that calculates the average of a set of numbers by dividing the sum of these numbers by their quantity.