The efficient frontier represents:a) The set of investments with the lowest riskb) The set of investments with the highest returnc) The set of portfolios offering the highest return for a given level ofriskd) The set of portfolios offering the lowest return for a given level ofrisk

The question pertains to the definition of the efficient frontier. The efficient frontier theory was…

Answered: The efficient frontier represents: a)…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 1Q

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An efficient portfolio is one that: Select one: a. maximises return for a given level of risk. b. maximises risk for a given level of return. c. minimises risk for a given rate of return. d. Both A and C. are efficient portfolios.
The expected return of a portfolio is simply the weighted average of the expected returns for the individual assets within the portfolio. Group of answer choices True False
The amount invested is one of the required inputs in a portfolio optimization model. True or False
Which of the following measures reflects the excess return earned on a portfolio per unit of its systematic risk a. Treynor’s measure b. Sharpe’s measure c. Jensen’s measure d. Total measure
The expected rate of return of an investment ________. a. equals one of the possible rates of return for that investment b. equals the required rate of return for the investment c. is the mean value of the probability distribution of possible returns d. is the median value of the probability distribution of possible returns e. is the mode value of the probability distribution of possible returns
To determine an optimal portfolio of investments when the available choices are divisible, the investment choices should first be ranked in increasing order based on which of the following? a. FW b. Initial investment c. IRR d. PW
a. What are the expected return and standard deviation of your client's portfolio?
Consider the following graph. According to Markowitz’ portfolio theory, which point on the graph represents optimal portfolio? C A B D
In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A. standard deviation of returns. B. beta. C. variance of returns. D. unique risk.
A plot/graph of the positive relation between systematic risk and expected return is called: O security market line standard deviation and width of the normal distribution O covariance graph O capital asset pricing model
The security market line describes the expected return for O The efficient portfolio O The inefficient portfolio O All portfolios and assets O The efficient and inefficient portfolios
The security market line depicts: a. Expected return as a function of systematic risk (indicated by beta) b. The market portfolio as the optimal portfolio of risky assets c. The relationship between a security’s return and the return on the index d. Portfolio combinations of the market portfolio and the risk-free asset e. Expected return as a function of volatility

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The efficient frontier represents: a) The set of investments with the lowest risk b) The set of investments with the highest return c) The set of portfolios offering the highest return for a given level of risk d) The set of portfolios offering the lowest return for a given level of risk