The efficient frontier A. represents the best attainable tradeoff between risk and return. B. includes all feasible sets of portfolios based on risk and return characteristics. C. provides the highest level of risk for the lowest level of return. D. is represented by the rightmost boundary of the feasible set of portfolios.

Question

Kadyn Shepherd

Business

26 November, 20:48

The efficient frontier A. represents the best attainable tradeoff between risk and return. B. includes all feasible sets of portfolios based on risk and return characteristics. C. provides the highest level of risk for the lowest level of return. D. is represented by the rightmost boundary of the feasible set of portfolios.

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Madeleine Mcclain · Answer 1

The correct answer is letter "A": represents the best attainable trade-off between risk and return.

Explanation:

The majority of investment choices require a risk-reward trade-off. The Efficient Frontier is a modern portfolio theory method that tells investors the best return they can expect from their portfolio, considering their willingness to accept volatility, thus, risk.