A(n) ________ portfolio maximizes return for a given level of risk, or minimizes risk for a given level of return.
A) efficient
B) risk-free
C) risk-neutral
D) risk-indifferent

Question

Quizplus · Accepted Answer

An efficient portfolio is one that is optimized to provide maximum return for a given level of risk or to minimize risk for a given level of return. Such a portfolio is considered to be on the "efficient frontier," which represents the optimal combination of risk and return achievable given the available investment options. A risk-free portfolio (B) would not provide any return, while a risk-neutral (C) or risk-indifferent (D) portfolio would not be optimized for either risk or return.

A(n) ________ Portfolio Maximizes Return for a Given Level of Risk