The efficient portfolios:
I. have only unique risk
II. provide highest returns for a given level of risk
III. provide the least risk for a given level of returns
IV. have no risk at all
A) I only
B) II and III only
C) IV only
D) II only

Question

Quizplus · Accepted Answer

Efficient portfolios are portfolios that provide the highest returns for a given level of risk or the least risk for a given level of returns. They do not have no risk at all and may have some unique risk. Therefore, options I and IV are incorrect. Option II and III correctly describe the characteristics of efficient portfolios, making option B the best choice.

The Efficient Portfolios: I. Have Only Unique Risk