Which of the following statements about the efficient frontier is FALSE? A) The slope of the efficient frontier increases steadily as one moves up the curve. B) A portfolio to the left of the efficient frontier is not attainable, while a portfolio to the right of the efficient frontier is inefficient. C) The efficient frontier represents the set of portfolios that has the minimum level of risk for every level of return. D) The efficient frontier line bends backwards due to less than perfect correlation between assets. Can someone pls explain option 4.
You mean how a “line bends backwards”? No, I cannot explain that. I would just shake my head and move on.
may be…the risk-return characteristics of a portfolio change in a non-linear fashion as its component weightings are changed. not sure tho
A
A is the answer. This statement is false because the slope of the EF actually decreases as one moves up the curve. Think about playing limbo…the slope of your back deceases as you “bend backwards” to go under the pole.
These see like very poor descriptions of visually/mathematically what is going on.
This may help.
