Post-modern portfolio theory (or PMPT) is an extension of the traditional modern portfolio theory ("MPT", which is an application of mean-variance analysis or "MVA"). Both theories propose how rational investors should use diversification to optimize their portfolios, and how a risky asset should be priced.
Read more about Post-modern Portfolio Theory: History, Overview, The Tools of PMPT
Famous quotes containing the word theory:
“It makes no sense to say what the objects of a theory are,
beyond saying how to interpret or reinterpret that theory in another.”
—Willard Van Orman Quine (b. 1908)