Which of the following makes this a true statement: The shape of the efficient frontier implies that:
A) diminishing returns apply to risk-taking in the investment world.
B) increasing returns apply to risk-taking in the investment world.
C) returns are not impacted by risk-taking in the investment world.
D) None of the options complete the sentence to make it true.

Question

Quizplus · Accepted Answer

The efficient frontier shows the optimal portfolio combinations of risk and return. The shape of the efficient frontier is curved, suggesting that there are diminishing returns to risk. This means that as an investor takes on more risk, the additional return they can expect to receive decreases. Therefore, choice A is the correct choice as it completes the sentence to make it true.

Which of the Following Makes This a True Statement: the Shape