A dominant portfolio within an opportunity set that has the lowest possible level of risk is referred to as the:
A)efficient frontier.
B)minimum variance portfolio.
C)upper tail of the efficient set.
D)tangency portfolio.
E)optimal covariance portfolio.

Question

Quizplus · Accepted Answer

The minimum variance portfolio is the dominant portfolio within the opportunity set that has the lowest possible level of risk. The efficient frontier refers to the set of portfolios that provide the highest expected return for a given level of risk, the upper tail of the efficient set refers to the portfolios with the highest level of return, the tangency portfolio is the point at which the capital market line intersects the efficient frontier, and the optimal covariance portfolio is the portfolio that maximizes diversification by minimizing the covariance between assets.

A Dominant Portfolio Within an Opportunity Set That Has the Lowest