A. Modern portfolio theory deals with the selection of portfolios that maximize expected returns consistent with individually acceptable levels of risk. Discuss the key assumptions used in the development of Efficient Portfolios.

B. The "theory of choice" describes the decision-making process with the help of a concept called the utility function. Describe how utility functions can be used to make investment decisions.

C. With the help of examples explain the meaning of portfolio diversification.

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A Modern Portfolio Theory MPT and Efficient Portfolios Modern Portfolio Theory deals with selecting portfolios that maximize expected returns while considering an individuals acceptable level of risk ... View the full answer