What is the 'Markowitz Efficient Set'
The Markowitz efficient set is a set of portfolios with returns that are maximized for a given level of risk based on meanvariance portfolio construction. The efficient "solution set" to a given set of meanvariance parameters (a given riskless asset and a given risky basket of assets) can be graphed into what is called the Markowitz efficient frontier.
BREAKING DOWN 'Markowitz Efficient Set'
The Markowitz efficient set is all of the portfolios on the efficient frontier, or those that generate the largest return for a given risk level. The meanvariance and subsequent efficient set theory at one time revolutionized portfolio management, and remains a core lecture in any economist's university years. The theory of meanvariance portfolios lead to the capital asset pricing model, and is still a vital component of professional money management today.

BlackLitterman Model
An asset allocation model that was developed by Fischer Black ... 
Homogeneous Expectations
An assumption in Markowitz Portfolio Theory that all investors ... 
Efficient Frontier
A set of optimal portfolios that offers the highest expected ... 
Harry Markowitz
A Nobel Memorial Prize winning economist who devised the modern ... 
Modern Portfolio Theory  MPT
A theory on how riskaverse investors can construct portfolios ... 
Capital Market Line  CML
A line used in the capital asset pricing model to illustrate ...

Trading
Modern Portfolio Theory: Why It's Still Hip
See why investors today still follow this old set of principles that reduce risk and increase returns through diversification. 
Trading
Market Efficiency Basics
Market efficiency theory states that a stockâ€™s price will fully reflect all available and relevant information at any given time. 
Managing Wealth
Explaining The Efficient Frontier
Most investment choices involve a tradeoff between risk and reward. The "Efficient Frontier" is a modern portfolio theory tool that shows investors the best possible return they can expect from ... 
Investing
How Investment Risk Is Quantified
FInancial advisors and wealth management firms use a variety of tools based in Modern portfolio theory to quantify investment risk. 
Investing
Find The Highest Returns With The Sharpe Ratio
Learn how to follow the efficient frontier to increase your chances of successful investing. 
Investing
The History Of The Modern Portfolio
Learn how the writings of John Burr Williams and Harry Markowitz led to the creation of the investment portfolio. 
Investing
Understanding Modern Portfolio Theory
Modern portfolio theory describes ways of diversifying assets in a portfolio in order to maximize the expected return given the ownerâ€™s risk tolerance. 
Markets
Explaining Efficiency
Efficiency refers to the ability to make something with the fewest resources possible. 
ETFs & Mutual Funds
The Evolution of ETFs
Key 20thcentury financial theories changed the way investors viewed markets and created the circumstances in which ETFs could emerge. 
Managing Wealth
The Workings Of Equity Portfolio Management
Achieve analytical efficiency by applying your evaluation to a key set of stocks.

What are the advantages of portfolio planning with the efficient frontier?
Learn about modern portfolio theory and the efficient frontier. Understand the advantages of portfolio planning with the ... Read Answer >> 
How have portfolios from within the efficient frontier performed historically?
Explore how the efficient frontier is used in selecting investment portfolios. Find out how risks and returns are used to ... Read Answer >> 
Why is risk return tradeoff important in designing a portfolio?
Learn how the risk return tradeoff is used in the construction of portfolios, and how modern portfolio theory seeks to diversify ... Read Answer >> 
How is portfolio variance reduced in Modern Portfolio Theory?
Learn about modern portfolio theory, specifically what it asserts about asset allocation and managing portfolio risk through ... Read Answer >> 
Which of the following is the most true regarding the type of assets found along ...
The correct answer is b. The efficient frontier is comprised mainly of portfolios that contain several imperfectly correlated ... Read Answer >> 
Where did Modern Portfolio Theory (MPT) come from?
Learn about modern portfolio theory, or MPT, and its origins. MPT has become a standard paradigm through which investors ... Read Answer >>