- CFA Exams
- CFA Exam: Level I 2021
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 7. Optimal Portfolio

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**CFA Practice Question**

For a portfolio to be efficient, it must exhibit the ______.

B. highest expected return for a given level of risk

C. lowest risk for all levels of expected return

D. highest expected return for all levels of risk

A. highest risk for a given level of expected return

B. highest expected return for a given level of risk

C. lowest risk for all levels of expected return

D. highest expected return for all levels of risk

Correct Answer: B

Efficient portfolios give the highest possible return for any given level of risk or, alternatively, the lowest possible risk for any given level of return.

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