Portfolio Management Q74
- A
For a given level of risk, Investor A’s maximum return is depicted by the CAL and Investor B’s maximum return is depicted by the efficient frontier.
- B
For a given level of risk, Investor A’s maximum return is depicted by the efficient frontier and Investor B’s maximum return is depicted by the CAL.
- C
For a given level of risk, the maximum return for both investor is depicted by the efficient frontier.
- Option : B
- Explanation : Since Investor A only invests in risky assets, the highest return for a given level of risk is indicated by the efficient frontier. Investor B invests in the risk free asset as well. For him, the highest return for a given level of risk is indicated by the capital allocation line (CAL).
