All Possible Risk-Return Combinations Available from Portfolios Consisting of Different

question 3

Multiple Choice

All possible risk-return combinations available from portfolios consisting of different group of assets are the __________.

• A) efficient frontier
• B) investment opportunity set
• C) portfolio set
• D) correlation
• E) capital asset pricing model

---

Definitions:

Required Return

The minimum expected return on an investment necessary to compensate for the risk taken by the investor, including the time value of money and inflation.

Payback

A method of investment appraisal that calculates the time needed for an investment to generate cash flows sufficient to recover the initial outlay.

Four Year Payback

A capital budgeting method that calculates the time required to recoup the initial investment in a project, specifically over a period of four years.