Selection of portfolio combinations from the efficient frontier will depend upon our willingness to assume risk.

Question

Quizplus · Accepted Answer

The efficient frontier represents various combinations of portfolios with the highest expected return for a given level of risk. The risk level of a portfolio is determined by its standard deviation or volatility. Therefore, selecting a portfolio combination from the efficient frontier involves considering the level of risk an investor is willing to assume. Different investors may have different risk preferences, and this will influence their choice of portfolio combination from the efficient frontier.

Selection of Portfolio Combinations from the Efficient Frontier Will Depend