Distinguish between modern and traditional portfolio analysis
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Secondary SchoolBusiness studies 13 points
Difference between modern and traditional portfolio theories
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Explanation:
Traditional Portfolio theory is one of the subjective analysis but it has provided positive results to many some people who have invested keeping in mind the individual securities. Through this traditional theory, investors has been getting the maximum return at the minimum risk.
On the other hand, modern portfolio theory emphasizes on maximizing of return through a combination of securities. It discusses the relationship between different securities and then draws inter-relationships of risks between them. This theory states that by combining a low risk security with the one with higher risk will ultimately result in a success by investor in making choice of investment.
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