(d) The aggregate scores for all the candidates are given below, together with their expected salaries. Assuming that the personnel manager's model is appropriate, determine the candidates who appear on the efficient frontier and explain the significance of this. Candidate A B C D E F G Aggregate score 50 31 75 90 20 62 49 Expected salary $46 000 $40 000 $42 000 $60 000 $54 000 $52 000 $42 000
The efficient frontier is a concept in portfolio theory which refers to the set of portfolios that provide the maximum expected return for a given level of risk or the minimum risk for a given level of expected return. In this case, the efficient frontier can be used to determine the candidates who provide the best combination of aggregate score (representing the combination of the various criteria) and expected salary.
To determine the efficient frontier, we first need to calculate the trade-off between the aggregate score and expected salary for each candidate. We can do this by plotting a scatterplot of the aggregate scores and expected salaries for each candidate and connecting the points to form a frontier. The candidates who lie on the frontier are considered to be the most efficient, as they provide the best combination of aggregate score and expected salary.
Based on the data provided, the efficient frontier can be calculated as follows:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
