A Portfolio That Belongs to the Markowitz Efficient Set of Portfolios

question 63

Multiple Choice

A portfolio that belongs to the Markowitz efficient set of portfolios will have which one of the following characteristics? Assume the portfolios are comprised of five individual securities.

• A)the lowest return for any given level of risk
• B)the largest number of potential portfolios that can achieve a specific rate of return
• C)the largest number of potential portfolios that can achieve a specific level of risk
• D)a positive rate of return and a zero standard deviation
• E)the lowest risk for any given rate of return

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Definitions:

Job Order Cost System

An accounting system that accumulates costs by individual jobs or batches rather than processes.

Manufacturing Overhead Applied

The portion of manufacturing overhead costs assigned to individual cost objects based on a predetermined rate or method.

Total Manufacturing Costs

The sum of all costs directly involved in the production of goods, including raw materials, labor, and overhead.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs and activity levels.