When considering the efficient frontier, financial managers should adhere to all of the following guidelines except which one?

Question

Quizplus · Accepted Answer

Option B is incorrect because financial managers should not automatically prefer the far right side of the efficient frontier simply because it offers the highest return. This approach ignores the level of risk involved in achieving that return and fails to consider other projects that may offer similar returns with lower levels of risk. Instead, financial managers should aim to maximize return for a given level of risk or minimize risk for a given level of return, while also selecting projects on the leftmost and uppermost sector of the possible projects to ensure optimal efficiency.

When Considering the Efficient Frontier, Financial Managers Should Adhere to All