Modern Portfolio Theory (MPT)

A variety of portfolio construction, asset valuation, and risk measurement concepts and models that rely on the application of statistical and quantitative techniques. Among the concepts and models associated with MPT are: portfolio theory, the capital asset pricing model (CAPM), arbitrage pricing theory, and the Black-Scholes option pricing model. See Black-Scholes Equation, Arbitrage Pricing Theory (APT), Capital Asset Pricing Model (CAPM) (diagram), Diversification (diagram), Efficient Market, Mean Variance (MV) Analysis.