You want to create the best portfolio that can be derived from two assets. Which one of the following will help you identify that portfolio?
A)highest portfolio beta
B)market equivalent level of risk
C)highest possible rate of return
D)Treynor-minimal portfolio
E)Sharpe-optimal portfolio

Question

Quizplus · Accepted Answer

The Sharpe-optimal portfolio incorporates both risk and return, which is necessary to create the best portfolio. It is a portfolio that gives the highest return per unit of risk (measured by the portfolio's standard deviation). Therefore, it helps identify the best portfolio for the given assets.

You Want to Create the Best Portfolio That Can Be