The Point of Tangency Between the Efficient Frontier and the Capital

question 48

Multiple Choice

The point of tangency between the efficient frontier and the capital market line:

• A)is the ideal portfolio of available investments.
• B)can be calculated by using the Markowitz portfolio theory and CAPM.
• C)represents the point at which the market is in equilibrium.
• D)All of the above

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Definitions:

Simple Linear Regression

A technique in statistics that fits a linear equation to data points to model how a dependent variable changes with one independent variable.

Explanatory Variable

An explanatory variable, also known as an independent variable, is a variable in statistical modeling that is manipulated to assess its effects on a dependent variable.

Normally Distributed

Describes a data distribution shaped like a symmetrical bell curve, with mean, median, and mode all equal.

Parameters

Parameters are specific numerical or categorical boundaries set within a study or experiment that define the data to be collected or the conditions under which the study is conducted.