Market portfolio: related pages

Efficient portfolio

A portfolio that provides the best expected returns for a given level of risk, or, equivalently, the lowest risk possible for a given level of expected returns.

Diversification

The reduction of risk achieved by buying a portfolio of securities whose returns are not correlated.

Risk premium

The difference between the rate of return on a security (or a market or an investment) and the risk free rate of return.

Asset allocation

Deciding the proportion of a portfolio that should be invested in each security type, market and sector.