An asset on the Markowitz efficient frontier has:
A) the greatest return for a given level of risk.
B) less risk than the market.
C) the greatest risk for a given level of return.
D) a return greater than the market.
E) A single asset cannot lie on the efficient frontier, only portfolios.

Question

Quizplus · Accepted Answer

An asset on the Markowitz efficient frontier has the greatest return for a given level of risk, which means that it is the most efficient asset in terms of risk-adjusted returns. Assets with lower returns for the same level of risk as an efficient frontier asset would be inferior investment choices, while assets with higher risk for the same level of return would also be less efficient.

An Asset on the Markowitz Efficient Frontier Has