The collection of investments that offers the highest expected return for a given level of risk, or offers the lowest risk for a given expected return is best described as a(n):
A) hedged portfolio.
B) efficient portfolio.
C) diversified portfolio.
D) maximized portfolio.

Question

Quizplus · Accepted Answer

An efficient portfolio is defined as one that offers the highest expected return for a given level of risk or the lowest level of risk for a given expected return, according to modern portfolio theory. This concept is central to the efficient frontier and portfolio optimization.

The Collection of Investments That Offers the Highest Expected Return