The dominant portfolio with the lowest possible level of risk out of a set of portfolios comprised of two securities is referred to as the:
A)efficient frontier.
B)minimum variance portfolio.
C)upper tail of the efficient set.
D)tangency portfolio.
E)risk-free portfolio.

Question

Quizplus · Accepted Answer

The minimum variance portfolio is the portfolio with the lowest possible level of risk in a set of portfolios comprised of two securities. It is the portfolio that provides the highest level of diversification for the given level of expected return.

The Dominant Portfolio with the Lowest Possible Level of Risk