Two theories, Classical Test Theory (CTT) and the Item Response Theory (IRT), underpin scale development (134). CTT is considered the traditional test theory and IRT the modern test theory; both function to produce latent constructs. Each theory may be used singly or in conjunction to complement the other's strengths (15, 135). Whether the researcher is using CTT or IRT, the primary goal is to obtain functional items (i.e., items that are correlated with each other, discriminate between individual cases, underscore a single or multidimensional domain, and contribute significantly to the construct).
The modern portfolio theory (MPT) was a breakthrough in personal investing. It suggests that a conservative investor can do better by choosing a mix of low-risk and riskier investments than by going entirely with low-risk choices. More importantly, it suggests that the more rewarding option does not add additional overall risk. This is the key attribute of portfolio diversification.The post-modern portfolio theory (PMPT) does not contradict these basic assumptions. However, it changes the formula for evaluating risk in an investment in order to correct what its developers perceived as flaws in the original.Followers of both theories use software that relies on either MPT or PMPT to build portfolios that match the level of risk that they seek."}},"@type": "Question","name": "What Are the Benefits of the Modern Portfolio Theory?","acceptedAnswer": "@type": "Answer","text": "The modern portfolio theory can be used to diversify a portfolio in order to get a better return overall without a bigger risk.Another benefit of the modern portfolio theory (and of diversification) is that it can reduce volatility. The best way to do that is to choose assets that have a negative correlation, such as U.S. treasuries and small-cap stocks.Ultimately, the goal of the modern portfolio theory is to create the most efficient portfolio possible.","@type": "Question","name": "What Is the Importance of the Efficient Frontier in the MPT?","acceptedAnswer": "@type": "Answer","text": "The efficient frontier is a cornerstone of the modern portfolio theory. It is the line that indicates the combination of investments that will provide the highest level of return for the lowest level of risk.When a portfolio falls to the right of the efficient frontier, it possesses greater risk relative to its predicted return. When it falls beneath the slope of the efficient frontier, it offers a lower level of return relative to risk."]}]}] EducationGeneralDictionaryEconomicsCorporate FinanceRoth IRAStocksMutual FundsETFs401(k)Investing/TradingInvesting EssentialsFundamental AnalysisPortfolio ManagementTrading EssentialsTechnical AnalysisRisk ManagementNewsCompany NewsMarkets NewsCryptocurrency NewsPersonal Finance NewsEconomic NewsGovernment NewsSimulatorYour MoneyPersonal FinanceWealth ManagementBudgeting/SavingBankingCredit CardsHome OwnershipRetirement PlanningTaxesInsuranceReviews & RatingsBest Online BrokersBest Savings AccountsBest Home WarrantiesBest Credit CardsBest Personal LoansBest Student LoansBest Life InsuranceBest Auto InsuranceAdvisorsYour PracticePractice ManagementFinancial Advisor CareersInvestopedia 100Wealth ManagementPortfolio ConstructionFinancial PlanningAcademyPopular CoursesInvesting for BeginnersBecome a Day TraderTrading for BeginnersTechnical AnalysisCourses by TopicAll CoursesTrading CoursesInvesting CoursesFinancial Professional CoursesSubmitInvestingQuantitative AnalysisModern Portfolio Theory: What MPT Is and How Investors Use It ByThe Investopedia Team Full Bio LinkedIn Twitter Investopedia contributors come from a range of backgrounds, and over 20+ years there have been thousands of expert writers and editors who have contributed.Learn about our editorial policiesUpdated September 10, 2021Reviewed byPeter Westfall Reviewed byPeter WestfallFull BioPeter Westfall is a distinguished professor of information systems and quantitative sciences at Texas Tech University.
Roadwork Theory and Practice-adds 1
The modern portfolio theory (MPT) was a breakthrough in personal investing. It suggests that a conservative investor can do better by choosing a mix of low-risk and riskier investments than by going entirely with low-risk choices. More importantly, it suggests that the more rewarding option does not add additional overall risk. This is the key attribute of portfolio diversification.
The post-modern portfolio theory (PMPT) does not contradict these basic assumptions. However, it changes the formula for evaluating risk in an investment in order to correct what its developers perceived as flaws in the original.
Another benefit of the modern portfolio theory (and of diversification) is that it can reduce volatility. The best way to do that is to choose assets that have a negative correlation, such as U.S. treasuries and small-cap stocks.
The efficient frontier is a cornerstone of the modern portfolio theory. It is the line that indicates the combination of investments that will provide the highest level of return for the lowest level of risk.
Color theory is both the science and art of using color. It explains how humans perceive color; and the visual effects of how colors mix, match or contrast with each other. Color theory also involves the messages colors communicate; and the methods used to replicate color.
hey , Peter Vukovic very nice ARTICLE , actually iam preparaing for architecture entrance exam . and i have to get very basic but informative sub about color theory , and i came up to this article and this is very helpful for my exam ..
Thank you, Patrick. I am Chinmay from India. Having taken up guitar at a relatively later age, I want to know the theory / formula behind Chord formations instead of only copying and practicing them. This article has really help me understand it. Looking forward to learn more from you..
The National Research Council's (NRC) Framework describes a vision of what it means to be proficient in science; it rests on a view of science as both a body of knowledge and an evidence-based, model and theory building enterprise that continually extends, refines, and revises knowledge. It presents three dimensions that will be combined to form each standard:
Dr. Nelson holds a baccalaureate degree in nursing from Duquesne University, and master’s degrees in both nursing and information science, as well as a PhD in education, from the University of Pittsburgh. Prior to her current position as President of her own consulting company, she was Professor and Chair of the Department of Nursing at Slippery Rock University in Pennsylvania. In the early 1980’s, one of Dr. Nelson’s employee benefits while teaching at the University of Pittsburgh was the opportunity to take university courses for only $5.00 a credit. After taking courses in computer assisted instruction and information science theory, she recognized these tools (computers) just might be somewhat useful at the bedside and in the classroom. She has been exploring and discovering just how useful they can be ever since. Dr. Nelson’s more recent research and publications focus on the specialty area of health informatics. Her latest book, Health Informatics: An Interprofessional Approach (2018), co-authored with Nancy Staggers, received the second place American Journal of Nursing Book of the Year award for Information Technology/Informatics. The second edition continues today as a primary textbook in the field of health informatics. Based on her contributions to nursing and health informatics she has been inducted into both the American Academy of Nursing and the first group of fellows in the National League for Nursing Academy of Nursing Education. She has also been recognized as a pioneer within the discipline by the American Medical Informatics Association. Her goal in serving as Editor of OJIN’s Informatics Column is to open a discussion about how we as nurses in the inter-professional world of healthcare can maximize the advantages and manage the challenges that computerization brings to our practice. 2ff7e9595c
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