The opportunity set of portfolios is:
A)all possible return combinations of those securities.
B)all possible risk-return combinations of those securities.
C)all possible risk combinations of those securities.
D)the lowest risk-return combination.
E)the best or highest risk-return combination.

Question

Quizplus · Accepted Answer

The opportunity set of portfolios includes all possible risk-return combinations of the securities, which allows an investor to choose the portfolio that best fits their investment objectives and risk tolerance. A and C are incorrect because the opportunity set includes both risk and return, not just one or the other. D is incorrect because it refers only to the lowest risk-return combination, while the opportunity set includes multiple combinations. E is incorrect because it refers only to the best or highest risk-return combination, while the opportunity set includes a range of possible combinations.

The Opportunity Set of Portfolios Is