Asked by Lauren Byrd-Moreno on Jun 09, 2024
Verified
What happens to portfolios that cannot be dominated?
A) They lie on the efficient frontier.
B) They are minimum risk portfolios.
C) They have low correlations.
D) They have maximum expected returns.
Efficient Frontier
The efficient frontier is a concept in modern portfolio theory representing those portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.
Minimum Risk Portfolios
Investment strategies that aim to minimize the overall risk of a portfolio through diversification and asset allocation.
Expected Returns
The anticipated profit or loss from an investment over a specific period.
- Acknowledge the impact of portfolio design on risk mitigation and the notion of the efficient frontier.
Verified Answer
Learning Objectives
- Acknowledge the impact of portfolio design on risk mitigation and the notion of the efficient frontier.
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