CFA Practice Question

CFA Practice Question

Which of the following portfolios is most likely to lie below the Markowitz efficient frontier?
A. Expected return of 8% and standard deviation of 12%.
B. Expected return of 7% and standard deviation of 13%.
C. Expected return of 9% and standard deviation of 15%.
Explanation: For portfolios to lie on the efficient frontier an increase in risk must be compensated by an increase in return. Portfolio B shows a lower return but a higher risk than A.

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