The Efficient Set of Portfolios

question 133

Multiple Choice

The efficient set of portfolios:

• A) contains the portfolio combinations with the highest return for a given level of risk.
• B) contains the portfolio combinations with the lowest risk for a given level of return.
• C) is the lowest overall risk portfolio.
• D) Both contains the portfolio combinations with the highest return for a given level of risk; and contains the portfolio combinations with the lowest risk for a given level of return.
• E) Both contains the portfolio combinations with the highest return for a given level of risk; and is the lowest overall risk portfolio.

---

Definitions:

Selling Price

The price at which a product or service is offered to consumers, determined by factors such as cost, market demand, and competition.

Markup Percentage

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.

Total Cost Concept

A management accounting concept that includes all direct costs, indirect costs, fixed, and variable costs associated with producing and selling a product.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much revenue contributes towards covering fixed costs and generating profit.