### GIGAMIND

Folder:

115 CFA

File:

115.100.01.01 Portfolio Management - Reading 51 - 1. A Portfolio Perspective on Investing

# 1. A Portfolio Perspective on Investing

## a. describe the portfolio approach to investing;

What is the purpose of portfolio theory of investing?

Portfolio theory is used to maximize an investment's expected rate of return for a given level of risk or minimize the level of risk for a given expected rate of return.

What is diversification ratio?

The diversification ratio is the ratio of the standard deviation of an equally weighted portfolio to the standard deviation of a randomly selected security.

##### Source:

- CFA