Modern portfolio theory - sustany/dvg GitHub Wiki

The Modern Portfolio Theory is the theory currently guiding the Prudent Investor Rule for trust administration by the trustee.�The Modern Portfolio Theory judges prudence not on investment strategy on individual investments but on the portfolio as a whole. Under the former Prudent Man Rule, there was no duty to diversify.�Judges would analyze each investment decision and decide if it was prudent or speculative based on that single investment. �The Modern Portfolio Theory judges the prudence of a particular investment on how it fits in with the rest of the portfolio.�The objective is to manage risk to determine the appropriate level of risk in light of the objectives of the particular trust.