Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Define efficient frontier
Expert Solution
Step 1
The efficient frontier is the collection of efficient portfolios, which provide the most expected return for a delineated risk level or the least risky for a provided expected return stage.
Step 2
Portfolios underneath the efficient frontier are ineffective since they do not return the degree of hazard sufficiently. The portfolios on which the efficient frontier cluster is located at the right are suboptimal as they have an increased risk of a given return rate.
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