Which One of the Following Portfolios Cannot Lie on the Efficient

question 54

Multiple Choice

Which one of the following portfolios cannot lie on the efficient frontier as described by Markowitz? $\begin{array}{ccc}\text { Portfolio } & \text { Expected Return } & \text { Standard Deviation } \\\text { W } & 9\% & 21\% \\\mathrm{X} & 5\%& 7\% \\\mathrm{Y} & 15\% & 36\% \\\mathrm{Z} & 12\% & 15 \%\end{array}$

• A) Only portfolio W cannot lie on the efficient frontier.
• B) Only portfolio X cannot lie on the efficient frontier.
• C) Only portfolio Y cannot lie on the efficient frontier.
• D) Only portfolio Z cannot lie on the efficient frontier.
• E) Cannot be determined from the information given.

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Definitions:

Base Rate Neglect

The tendency to ignore information about general principles in favor of very specific but vivid information.

Bonferroni Inequalities

Statistical safeguards used to reduce the chances of making incorrect inferences when multiple hypothesis tests are being performed simultaneously.

False Discovery Rate

A statistical method used to estimate the proportion of false positives among a set of identified positives, often applied in multiple hypothesis testing.

Boole's Inequality

A mathematical theorem that describes the upper bound on the probability of the union of several events, emphasizing the limitations of additive probabilities.