T1The curve below represents all portfolios that maximize returns for the risk assumed. The pointmarked by X is considered sub-optimal because:72σ1Asset 1Asset 2The "reward-to-variability" ratio is not on the curve02σThe sharpe ratio is greater than the returns from a 50/50 allocationThe returns for the levels of risk assumed are lower than what may be available in other portfolios of similarrisk

The curve is the effecient frontier. It denotes the portfolios that offer the highest expected…

Answered: The curve below represents all…

The curve below represents all portfolios that maximize returns for the risk assumed. The point marked by X is considered sub-optimal because:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

T1
The curve below represents all portfolios that maximize returns for the risk assumed. The point
marked by X is considered sub-optimal because:
72
σ1
Asset 1
Asset 2
The "reward-to-variability" ratio is not on the curve
02
σ
The sharpe ratio is greater than the returns from a 50/50 allocation
The returns for the levels of risk assumed are lower than what may be available in other portfolios of similar
risk

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Which of the following statements is correct concerning a mean-variance efficient portfolio of risky assets in a world where there is also a risk-free asset? OA. It will be impossible to form a different portfolio yielding a lower level of risk unless the portfolio also earns a lower return, O B. Risk averse investors will only choose to invest in the market portfolio (M) regardless of the risk-free rate. OC. The portfolio will always achieve the maximum possible returns. O D. The portfolio will always be inside the feasible set.
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