An Efficient Portfolio Is a Portfolio That Does Which One

question 30

Multiple Choice

An efficient portfolio is a portfolio that does which one of the following?

• A) offers the highest return for the lowest possible cost
• B) provides an evenly weighted portfolio of diverse assets
• C) eliminates all risk while providing an expected positive rate of return
• D) lies on the vertical axis when graphing expected returns against standard deviation
• E) offers the highest return for a given level of risk

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Definitions:

Marginal Utility

The added delight or usefulness a person acquires by consuming an extra unit of a good or service.

Utility Theory

A concept in economics that suggests individuals make decisions based on the expected utility or satisfaction they will derive from those decisions.

Consumer Surplus

The disparity between what consumers are inclined and financially able to spend on a good or service compared to what they ultimately pay.

Marginal Utility

The boost in satisfaction or utility a person enjoys from consuming another unit of a good or service.