The optimal portfolio on the efficient frontier for a given investor does not depend on
A) the investor's degree-of-risk tolerance.
B) the coefficient, A, which is a measure of risk aversion.
C) the investor's required rate of return.
D) the investor's degree-of-risk tolerance and the investor's required rate of return.
E) the investor's degree-of-risk tolerance and the coefficient, A, which is a measure of risk aversion.

Question

Quizplus · Accepted Answer

The optimal portfolio on the efficient frontier for a given investor is determined by the investor's risk tolerance and their measure of risk aversion (coefficient A), not by their required rate of return. The required rate of return is a result of the chosen portfolio, not a determinant of its position on the efficient frontier.

The Optimal Portfolio on the Efficient Frontier for a Given