Portfolio Theory and Management

Abstract This chapter provides an overview of portfolio theory and management. It discusses the three major steps in the portfolio management process—planning, execution, and feedback—and the key tasks involved in each step. Next the chapter examines modern portfolio theory including such topics as asset pricing models, traditional finance models, behavioral finance, alternative investments, performance evaluation and presentation, and the recent financial crisis. Next the chapter describes the purpose of the book, its distinguishing features, and intended audience. The chapter then discusses the structure of the remaining 29 chapters and provides an abstract of each chapter. The final section offers a summary and conclusions. While the theory and practice of portfolio management have been moving ahead at a dizzying pace, this book enables readers to gain a better understanding of the existing state of knowledge and the challenges remaining in this area.