You Are Graphing the Portfolio Expected Return Against the Portfolio

question 49

Multiple Choice

You are graphing the portfolio expected return against the portfolio standard deviation for a portfolio consisting of two securities. Which one of the following statements is correct regarding this graph?

• A)Risk-taking investors should select the minimum variance portfolio.
• B)Risk-averse investors should select the portfolio with the lowest rate of return.
• C)Some portfolios will be efficient while others will not.
• D)The minimum variance portfolio will have the lowest portfolio expected return of any of the possible portfolios.
• E)All possible portfolios will graph as efficient portfolios.

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Definitions:

Humility

The quality of having a modest or low view of one's importance, often enabling individuals to remain open to learning and respecting others.

Skepticism

An attitude of doubting the truth of something, such as a claim or statement.

Curiosity

A strong desire to learn or know something, drawing individuals towards novel and challenging experiences or information.

Empirical Approach

A method of inquiry that emphasizes evidence gathered through observation and experimentation rather than theory alone.