An efficient portfolio:
I.has only unique risk;
II.provides the highest expected return for a given level of risk;
III.provides the least risk for a given level of expected return;
IV.has no risk at all
A)I only
B)II and III only
C)IV only
D)II only

Question

Quizplus · Accepted Answer

An efficient portfolio provides the highest expected return for a given level of risk (II) and provides the least risk for a given level of expected return (III). It does not have no risk at all (IV) and may still have some unique risk (I) as it is composed of assets with varying levels of risk correlated in a way that minimizes overall risk. Therefore, B is the correct choice.

An Efficient Portfolio: I.has Only Unique Risk;