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Please read through these questions, and answer them,
to see if you understand how the Nobel Prize winning Modern Portfolio
Theory (MPT) academic philosophy works.
True or False?
The lifelong MPT (Modern Portfolio Theory) academic philosophy is
to obtain market returns with less risk. This is a slow process
and therefore is a lifelong investment strategy.
True or False?
Most
investors are not aware they have a choice on how to invest in the
market and that MPT is a choice.
True or False?
When
investing in the MPT, investors’ fees and hidden expenses are
typically reduced 50% or more from their previous investment expenses.
True or False?
Two
reasons why the MPT reduces investors’ expenses:
1. The investments in the MPT are purchased/sold on discount due
to the large quantities purchased/sold at once and
2. Costs are kept to a minimum due to low turnover of assets through
very infrequent trading by the professional money managers.
True or False?
The
MPT follows an efficient passive investment philosophy. Over time,
the MPT has historically outperformed the market as a whole.
True or False?
Because
the MPT strategy uses broadly diversified professionally managed
asset class “pure mutual funds”, in “up markets”
your portfolio will not have the highest returns, and in the “down
markets” your portfolios will not have the lowest returns.
True or False?
The
developers of the MPT were mostly from the University of Chicago’s
Economics Department and received the Nobel Prize in Economics for
the MPT.
True or False?
The MPT can be used in most Employers’ Retirement Plans, through
professional money management.
All of the answers are true!
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