Mean-variance optimization is a quantitative approach used in finance to choose the proportions of various assets in a portfolio to maximize expected return for a given level of risk or minimize risk for a given level of expected return. This method relies on the trade-off between risk and return, allowing investors to construct an efficient frontier that outlines the best possible portfolios. It connects deeply with theories that address rational decision-making in investments and explores how investors can balance their preferences for risk and reward.
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