To identify the efficient portfolio we must know ________,________,and ________ between investments.
A) risk level; required return; profitability
B) value of risk free; required return; correlations
C) expected return; volatilities; correlations
D) systematic risk; nonsystematic risk and required return

Question

Quizplus · Accepted Answer

To identify the efficient portfolio, we must know the expected return, volatilities, and correlations between investments. These factors help in finding the optimal combination of assets that offer the highest return for a given level of risk or the lowest risk for a given level of return. The value of risk-free and required return are also important factors but they only come into play when constructing the capital market line or choosing the risk-free asset. Systematic risk, nonsystematic risk, and required return are not sufficient factors to identify the efficient portfolio.

To Identify the Efficient Portfolio We Must Know ________,________,And ________

To Identify the Efficient Portfolio We Must Know ,,And