The goal of an efficient portfolio is to ________.
A) achieve a predetermined rate of return for a given level of risk
B) maximize risk in order to maximize profit
C) minimize profit in order to minimize risk
D) minimize risk for a given level of return

Question

Quizplus · Accepted Answer

The goal of an efficient portfolio is to minimize risk for a given level of return, meaning the investor wants to get the highest return possible given their desired level of risk. Therefore, option D is the best choice. Option A is incorrect because the rate of return is not predetermined, but rather the investor's desired rate of return is taken into consideration when selecting investments. Option B is incorrect because maximizing risk does not necessarily lead to maximizing profit, as the investor could be exposed to too much risk and suffer losses. Option C is also incorrect because minimizing profit is not the goal of any investment strategy.

The Goal of an Efficient Portfolio Is to ________