A portfolio comprised of which one of the following is most apt to be the minimum variance portfolio?
A) 100 percent stocks
B) 100 percent bonds
C) 50/50 mix of stocks and bonds
D) 30 percent stocks and 70 percent bonds
E) 30 percent bonds and 70 percent stocks

Question

Quizplus · Accepted Answer

A minimum variance portfolio aims to achieve the lowest possible risk for a given level of expected return. Typically, a higher allocation to bonds, which are generally less volatile than stocks, will result in a lower overall portfolio variance. Therefore, a 30 percent stocks and 70 percent bonds allocation is most likely to be the minimum variance portfolio among the given options.

A Portfolio Comprised of Which One of the Following Is