Efficient Frontier (Portfolio Management)

Which of the following statements best describes an investment that is not on the efficient frontier?

  1. portfolio with lower return for same risk
  2. portfolio with lower risk for same return

solution: 2
how? won’t it be option 1?

Portfolio Return Risk
A 8% 12%
B 7% 12%
C 15% 20%

So the portfolio B will not lie on efficient frontier as lower return for same risk.

  1. is definitely not on the efficient frontier.

  2. might be on the efficient frontier, and it might not be.

Where’d you get this question?

A question from classes test

It’s not a good question.

Feel free to tell your teacher that I said so.