Home  >  115 CFA  >  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.


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    CFA

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