Wed 18 Jun 2008
A)Â A portfolio to the left of the efficient frontier is not attainable, while a portfolio to the right of the efficient frontier is inefficient.
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B)Â The efficient frontier represents the set of portfolios that has the minimum level of risk for every level of return.
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C)Â The efficient frontier line bends backwards due to less than perfect correlation between assets
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D)Â The slope of the efficient frontier increases steadily as one moves up the curve.
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D) is wrong.Â
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This statement should read, "The slope of the efficient frontier decreases steadily as one moves up the curve." The other statements are true.
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