Given the capital allocation line, an investor's optimal portfolio is the portfolio that
A) maximizes her expected profit.
B) maximizes her risk.
C) minimizes both her risk and return.
D) maximizes her expected utility.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The optimal portfolio for an investor, according to the capital allocation line, is the one that maximizes her expected utility. This takes into account her risk tolerance and expected returns, aiming for the best balance between the two.

Given the Capital Allocation Line, an Investor's Optimal Portfolio Is