What is the key factor that influences the overall return of a portfolio?

The number of stocks in the portfolio The individual stock prices The weights assigned to each stock The past performance of the stocks

What does a minimum variance portfolio represent?

The portfolio with the highest possible return The portfolio with the lowest possible risk The portfolio with an equal weighting of all stocks The portfolio with the highest historical returns

What is a characteristic of a maximum return portfolio?

It has the lowest possible risk It has an equal weighting of all stocks It has the highest possible return It consists only of high-growth stocks

What is the relationship between risk and return when the variance of a portfolio is fixed?

There is only one possible portfolio return Higher returns always come with higher risk Multiple portfolios with varying returns can be achieved Risk and return are not related in this scenario

What is a crucial aspect of using the Solver tool in Excel for portfolio optimization?

Manually entering the desired weights for each stock Using historical stock prices to predict future returns Ensuring that the data is well-organized and linked Selecting stocks based on personal preferences

What is the purpose of setting constraints when using the Solver tool for portfolio optimization?

To limit the number of stocks in the portfolio To ensure that the total weight of all stocks equals 100% To exclude certain stocks from the optimization process To force the Solver to select specific weights for each stock