An Efficient Portfolio Is a Portfolio That Maximizes Return for a Given

question 87

True/False

An efficient portfolio is a portfolio that maximizes return for a given level of risk or minimizes risk for a given level of return.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another more or less expensive one.

Income Effect

Income effect describes the change in an individual's or economy's consumption patterns due to a change in real income.

Opportunity Cost

The cost of foregone alternatives, the value of the best alternative given up when a decision is made.

Wage Increases

Adjustments made to the salary of employees, typically to account for inflation, performance, or changes in the cost of living.