Which Statement Correctly Applies to the Feasible Set of Returns

question 10

Multiple Choice

Which statement correctly applies to the feasible set of returns for a portfolio consisting of domestic stocks,A and B? Assume that the expected returns are plotted against standard deviations.

• A)Any combination of Stock A and Stock B that plot to the right of the minimum variance portfolio is an efficient portfolio.
• B)Given any specific level of risk,the maximum obtainable rate of return will plot on the efficient frontier.
• C)The minimum variance portfolio will move to the right on the risk-return graph if foreign securities are added to the portfolio.
• D)To obtain the highest possible return,the portfolio return and standard deviation should plot above the feasible set.
• E)The higher the correlation between Stocks A and B,the greater the bend in the curve of the feasible set.

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