# PM

The efficient frontier enables managers to reduce that number of possible portfolios considered because the portfolios on the efficient frontier: A) have lower risk levels for every level of expected return than all other possible portfolios. B) have higher expected returns for every level of risk than all other possible portfolios. C) can be purchased at lower transactions costs than all other possible portfolios. D) have higher risk levels for every level of expected return than all other possible portfolios.

B

umm… B.

A and B seem awfully similar…

Should be A and B… what’s the catch? to be efficient, there are no transaction costs???

ba ba ba b

B

I’d go with A because I think the efficient frontier is based around risk more than reward, but B seems right as well.

Its B! though i think A says the same thing… comments?!

B…wouldn’t A imply it could be portfolios on the curve back under (maybe I’m mixing up curves).

I think it has to do with Risk being on the X axis(independent variable).

when I picked B I was thinking about the fact that the efficient frontier dominates the minimum variance portfolios - where the efficient fronteir portfolios have a higher return for a given level of risk, as they plot above the minimum variance portfolios.

well… giving more thought into it, it makes sense… the efficient frontier is the part of the minimum variance frontier that lies above the global min variance portfolio… which is the a part above the curve that has the higest returns per level of risk…

agree with ilivino… A and B would have been for the minimum variance frontier, not the efficient frontier

Ok, so I was visualizing it correctly…thus A gets knocked out as it would imply the option of selecting a portfolio with lower expected return given a certain level of risk…only Ameriprise does this.

a. I second SanFranMatt 's reasoning

B

B. Agree with ilvino’s logic.

LanceTX Wrote: ------------------------------------------------------- > I think it has to do with Risk being on the X > axis(independent variable). I’m going with Lance on this one - the curve explains returns as a function (?) of risk, not the other way around.

> Its B! though i think A says the same thing… comments?! Usif do you have the answer explanation?