Adding additional risky assets to the investment opportunity set will generally move the efficient frontier ________ and to the ________.
A) up; right
B) up; left
C) down; right
D) down; left

Question

Quizplus · Accepted Answer

Adding additional risky assets to the investment opportunity set generally moves the efficient frontier up and to the left. This is because the inclusion of more assets provides greater diversification benefits, potentially increasing the expected return for a given level of risk or decreasing the risk for a given level of expected return.

Adding Additional Risky Assets to the Investment Opportunity Set Will