The efficient set of portfolios: contains the portfolio combinations with the hi
ID: 2790457 • Letter: T
Question
The efficient set of portfolios:
contains the portfolio combinations with the highest return for a given level of risk.
contains the portfolio combinations with the lowest risk for a given level of return.
is the lowest overall risk portfolio.
Both contains the portfolio combinations with the highest return for a given level of risk; and contains the portfolio combinations with the lowest risk for a given level of return.
Both contains the portfolio combinations with the highest return for a given level of risk; and is the lowest overall risk portfolio.
Explanation / Answer
Explanation:
Efficient set Portfolio means that portfolio which is best for a given risk level or a given level of return. For example.
Consider the following situations
If the given level of risk is 4% then the efficient portfolio would be Portfolio D. If the given level of Return is 15% then the efficient portfolio would be Portfolio D.
Answer:
Both contains the portfolio combinations with the highest return for a given level of risk; and contains the portfolio combinations with the lowest risk for a given level of return.
Stock Return Risk (SD) A 10% 8% B 12% 4% C 12% 5% D 15% 4% E 15% 5%Related Questions
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