Minimum risk portfolio refers to a combination of assets:
A)and liabilities that reduces the variance of portfolio returns to the lowest feasible level.
B)that leverages the variance of portfolio returns to the optimal level.
C)that reduces the variance of portfolio returns to the lowest feasible level.
D)that reduces the variance of portfolio returns to zero.

Question

Quizplus · Accepted Answer

The minimum risk portfolio is designed to reduce the variance of portfolio returns to the lowest feasible level. This means that it seeks to minimize risk while still achieving a certain return level. It does not seek to completely eliminate risk (answer D) or leverage risk to an optimal level (answer B).

Minimum Risk Portfolio Refers to a Combination of Assets