MPT

MPT, or Modern Portfolio Theory, is a financial strategy that helps investors build investment portfolios to balance risk and return. It encourages diversifying investments across different assets so that the overall risk is minimized without sacrificing potential gains. The theory suggests that by carefully selecting a mix of investments, investors can achieve the highest possible return for a given level of risk or, alternatively, reduce risk for a desired return. Essentially, MPT provides a mathematical framework to optimize investment choices, aiming to create a well-balanced portfolio suited to an individual’s risk tolerance and financial goals.