You combine a set of assets using different weights such that you produce the following results. Which one of these portfolios CANNOT be a Markowitz efficient portfolio?
A) A
B) B
C) C
D) D
E) E

Question

You combine a set of assets using different weights such that you produce the following results.  Which one of these portfolios CANNOT be a Markowitz efficient portfolio?
A) A 
B) B 
C) C 
D) D 
E) E

Quizplus · Accepted Answer

A Markowitz efficient portfolio is a portfolio that provides the highest expected return for a given level of risk or the lowest risk for a given level of expected return. All of the portfolios (A-D) can be considered Markowitz efficient portfolios, as they represent different risk-return trade-offs. However, portfolio E cannot be a Markowitz efficient portfolio because it lies below the efficient frontier, which means that a higher level of return can be achieved with the same level of risk or a lower level of risk can be achieved with the same level of return by combining the assets in a different way. Therefore, portfolio E is dominated by other portfolios on the efficient frontier and should not be selected by an investor.

You Combine a Set of Assets Using Different Weights Such