fter combining a riskfree asset with the efficient frontier of risky portfolios, you no longer need to know an investor's preferences over risk and return to identify the risky portfolio they should hold. Group of answer choices True False
fter combining a riskfree asset with the efficient frontier of risky portfolios, you no longer need to know an investor's preferences over risk and return to identify the risky portfolio they should hold. Group of answer choices True False
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
After combining a riskfree asset with the efficient frontier of risky portfolios, you no longer need to know an investor's preferences over risk and return to identify the risky portfolio they should hold.
Group of answer choices
True
False
Expert Solution
Step 1
Step 1
The effective limit of a set of relevant portfolios provides the highest expected return on a specified level of risk or very low risk of a certain level of expected return. Portfolios that fall below the functional threshold are the best because they do not offer sufficient risk-level benefits. Portfolios that meet to the right of the active boundary are much lower because they have a higher risk level of defined rate.
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