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Published in:
Cover of the book

2023 | OriginalPaper | Chapter

1. Portfolio Theory and Practice

Authors : James W. Kolari, Seppo Pynnönen

Published in: Investment Valuation and Asset Pricing

Publisher: Springer International Publishing

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Abstract

This chapter overviews the portfolio selection process developed by Nobel Laureate Harry Markowitz (1952, 1959). Basic concepts, such as ex ante and ex post valuation, variance, covariance, correlation, diversification, the mean-variance investment parabola, are introduced that are important in the field of asset pricing.

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Appendix
Available only for authorised users
Footnotes
1
Kolari et al. (2021) observed that the efficient frontier could collapse to the Y-axis in the unrealistic case of infinite number of assets. In the real world, the total number of assets is large but far from this infinite limit condition.
 
Literature
Kolari, J.W., W. Liu, and J. Huang. 2021. A New Capital Asset Pricing Model: Theory and Evidence. New York, NY: Palgrave Macmillan.CrossRef
Markowitz, H.M. 1952. Portfolio selection. Journal of Finance 7: 77–91.
Markowitz, H.M. 1959. Portfolio Selection: Efficient Diversification of Investments. New York, NY: Wiley.
Michaud, R.O. 1989. The Markowitz optimization enigma: Is “optimized’’ optimal? Financial Analysts Journal 45: 31–42.CrossRef
Metadata
Title
Portfolio Theory and Practice
Authors
James W. Kolari
Seppo Pynnönen
Copyright Year
2023
Book
Investment Valuation and Asset Pricing

Print ISBN: 978-3-031-16783-6

Electronic ISBN: 978-3-031-16784-3

Copyright Year: 2023

DOI
https://doi.org/10.1007/978-3-031-16784-3_1