A portfolio is efficient if and only if the expected return of every available security equals its ________.
A) average return
B) weighted average return
C) realized return
D) required return

Question

Quizplus · Accepted Answer

An efficient portfolio is a portfolio that provides the maximum possible expected return for a given level of risk, or the minimum possible risk for a given level of expected return. In order for a portfolio to be efficient, the expected return of every available security in the portfolio must equal its required return. This is the return that investors demand to invest in a security and is based on factors such as the risk level of the security and the current market conditions. Therefore, the best choice for the blank is D: required return.

A Portfolio Is Efficient If and Only If the Expected