The Point of Tangency Between the Efficient Frontier and the Security

question 40

True/False

The point of tangency between the efficient frontier and the Security Market Line is considered to represent an optimum portfolio.

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Definitions:

Indifference Curves

In consumer theory, a graph showing combinations of goods or services among which a consumer is indifferent, reflecting preferences.

Optimum

The condition or outcome that is most favorable or efficient under the given circumstances.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.

Indifference Curves

Graphical representations in economics showing different combinations of goods that give a consumer equal satisfaction and utility.