In designing a portfolio, investors seek to maximize the expected return from their investment, given some level of risk they are willing to accept. Portfolios that satisfy this requirement are called ________ portfolios.

Question

Quizplus · Accepted Answer

Portfolios that maximize the expected return given a level of risk are called efficient portfolios. These portfolios offer the highest return for a given level of risk, or the lowest risk for a given level of return. Therefore, option C is the correct choice. Options A and D are not commonly used terms in finance, and option B suggests that investors are only seeking to meet a minimum requirement rather than maximize their return.

In Designing a Portfolio, Investors Seek to Maximize the Expected