Question

The term efficient frontier refers to the set of portfolios which?

1) Maximize returns for a given level of risk
2) Minimize risk for a given level of returns
3) Maximize returns and minimize risk
4) Minimize returns and maximize risk

Answer 1

The efficient frontier refers to the set of portfolios that maximize returns for a given level of risk.1) Maximize returns for a given level of risk

Step-by-step explanation:

The efficient frontier refers to the set of portfolios that maximize returns for a given level of risk. It represents the optimal combination of assets that provide the highest potential return for a given level of risk. Portfolios that fall below the efficient frontier are considered suboptimal, as they either have lower returns for the same level of risk or higher risk for the same level of returns.