Market Risk Market risk is that part of a security's risk that is common to all securities in the same general class (stocks and bonds) and, therefore, cannot be eliminated through diversification.
Market Value Market value is the value of an investment if it were to be resold, or the current price of a security being sold on the market.
Modern Portfolio Theory (MPT) Modern portfolio theory proposes how investors seek to construct an optimal portfolio by considering the relationship between risk and return, especially as measured by alpha, beta, and R-squared. This theory recommends that the risk of a particular stock should not be looked at on a stand-alone basis, but rather in relation to how that particular stock's price varies in relation to the variation in price of the market portfolio. The theory goes on to state that given an investor's preferred level of risk, a particular portfolio can be constructed that maximizes expected return for that level of risk.
Mutual Funds Mutual funds are investment vehicles that are made up of a pool of funds from many investors for the purpose of investing in securities such as stocks, bonds, money markets or similar types of assets. Investors in a mutual fund typically have the same investment objective and a portfolio manager invests the pooled assets to match the investment objective of the fund as stated in the fund's prospectus. Mutual funds are divided into shares and can be bought much like stocks, allowing mutual funds to have a high liquidity. Mutual funds are convenient, particularly for small investors, because they diversify an individualís monies among a number of investments. Investors share in the profits of a mutual fund, and mutual fund shares can be sold back to the company on any business day at the net asset value price. Mutual funds may or may not have a load or fee.