Mean Variance Optimization is the framework for maximizing the reward-to-risk ratio of a portfolo. Mean in the numerator refers to the mean expected return and variance in the denominator refers to a measure of expected variability. MVO is a key takeaway from Modern Portfolio Theory as it is assumed that all investors maximize returns relative to risk. A software program called an optimizer generates weights to securities while maximizing the reward-to-risk ratio.
Synonyms: Mean-Variance, MVO, Mean/Variance Optimization
Click box for answer.
Doc: One MPT assumption is that all investors
Doc: In theory, right? My stockbroker says that almost no one follows MPT.
Many terms have 4-5 minute videos showing a derivation and explanation. If this term had one, it would appear here.
Videos can also be accessed from the YouTube Channel.
If this term had a video, the script would be here.
Our trained humans found other terms in the category portfolio management you may find helpful.
For links to all glossary terms and videos click the Outline button below.
Learn this stuff faster. Subscribe here.
Next, we stick with portfolio theory and cover the Minimum Variance Portfolio with a video. Click Next.