efficient frontier

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CareerThruCFA

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Which of the following statements concerning the efficient frontier is most accurate? It is the:
A) set of portfolios that gives investors the lowest risk.
B) set of portfolios where there are no more diversification benefits.
C) set of portfolios that gives investors the highest return.
 
is this a trick question where answer A and C are the same? meaning the efficient frontier gives you the lowest risk for a level of return or the highest return for a level of risk
i think its b
 
Answer is B. Answers A and C need to be combined to hold some weight.
 
The answer must be B. The efficient frontier illustrates the portfolios that yield the highest level of return for total risk. Therefore, there are no more benefits to be had because your risk adjusted return is maximized once the portfolio falls on the curve.
 
THE ANSWER IS B!!!!!!
RRRRRRRAAAAAAAARRRRRRRRWWWWWWWLLLLLL!!!!!
(I really wish the OP would post the answer, lol)
 
If this were a question of economics (the production possibility frontier) it would definitely be C because anything else would be either inefficient or impossible. However, your portfolio is optimized when it has no more diversifcation benefit which reduces your exposure to individual assest risk while allowing the same portfolio return. B final answer
 
It’s B. A is the min. variance portfolio and C is just the portfolio with highest expected return, irregardless of risk.
 
Which of the following statements concerning the efficient frontier is most accurate? It is the:
A) set of portfolios that gives investors the lowest risk.
B) set of portfolios where there are no more diversification benefits.
C) set of portfolios that gives investors the highest return.
Correct Answer: B
 
Efficient Frontier as discussed in the curriculum refers to the market portfolio, M, which by definition is completely diversified. EF does not discuss risk or return in isolation.
Hence, A and C are wrong and B is correct.
 
I think there is a problem with this question. The market portfolio is in the efficient frontier but not all portfolios and assets in this frontier are the best diversification.
 
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