The addition of foreign securities to the domestic portfolio opportunity set shifts the efficient frontier:
A)down and to the left.
B)up and to the right.
C)up and to the left.
D)down and to the right.

Question

Quizplus · Accepted Answer

The addition of foreign securities to the domestic portfolio opportunity set increases the diversity of the portfolio, which tends to increase returns for a given level of risk. This shift the efficient frontier up and to the left, providing better portfolio options for investors.

The Addition of Foreign Securities to the Domestic Portfolio Opportunity