Pick the correct statement: a. The Optimal Risk Portfolio and the Overall Optimal Portfolio are the same. b. The Overall Optimal Portfolio is the same for all investors. c. The Optimal Risky Portfolio is the same for all investors. d. The Overall Optimal Portfolio is the point of the efficient frontier where the Capital Allocation Line is tangent to the efficient frontier.
Pick the correct statement:
a. The Optimal Risk Portfolio and the Overall Optimal Portfolio are the same.
b. The Overall Optimal Portfolio is the same for all investors.
c. The Optimal Risky Portfolio is the same for all investors.
d. The Overall Optimal Portfolio is the point of the efficient frontier where the Capital Allocation Line is tangent to the efficient frontier.
An efficient portfolio is referred to as the most preferred by investors due to its risk or reward features, which approximate a utility function of an investor. A portfolio is used to maximize the preferences of an investor with regard to the risk as well as return.
An efficient frontier is referred to as the set of optimal portfolios, which are used to offer the highest expected return regarding the defined level of the risk or lower level of risk regarding the expected return level. Portfolios used to lie below for an efficient frontier that is sub-optimal as there will not provide enough return regarding the level of risk.
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