What is the term used to describe the curve that represents the optimal risk-return combinations for a portfolio?

Minimum Variance Curve Efficient Frontier Risk-Return Spectrum Portfolio Optimization Line

According to the text, what is the primary goal of an investor when constructing a portfolio?

Minimizing risk at all costs Maximizing returns regardless of risk Balancing risk and return based on personal preferences Achieving the highest possible return for a given level of risk

What does the leftmost point on the efficient frontier typically represent?

The portfolio with the highest return The portfolio with the lowest risk The portfolio with the highest risk The portfolio with the most diversified assets

Why are portfolios that fall below the efficient frontier considered inefficient?

They have too much risk for the given level of return They do not offer enough diversification They do not include enough high-growth stocks They have too little risk for the given level of return

What is the key factor that determines the position of a portfolio on the efficient frontier?

The number of stocks in the portfolio The specific stocks included in the portfolio The weighting of each stock in the portfolio The overall market conditions