Dominant Portfolios Determine which one of these three portfolios dominates another.Name the dominated portfolio and the portfolio that dominates it.Portfolio Blue has an expected return of 7 percent and risk of 10 percent.The expected return and risk of portfolio Yellow are 13 percent and 10 percent,and for the Purple portfolio are 9 percent and 14 percent.
A)Portfolio Blue dominates portfolio Yellow
B)Portfolio Yellow dominates portfolio Blue
C)Portfolio Purple dominates portfolio Blue
D)Portfolio Purple dominates portfolio Yellow

Question

Quizplus · Accepted Answer

Portfolio Yellow dominates portfolio Blue because it has a higher expected return with the same level of risk. Portfolio Purple cannot dominate either Blue or Yellow because it has a higher level of risk and either a lower or equal level of expected return compared to the other portfolios.

Dominant Portfolios Determine Which One of These Three Portfolios Dominates