Efficient Frontier

by | May 6, 2015

Efficient Frontier

Exhibit 1: For every point in the achievable region, there will be at least one portfolio that can be constructed from available risky assets that has the volatility and expected return corresponding to that point. The efficient frontier is the orange curve that runs along the top of the achievable region. Portfolios on the efficient frontier are optimal in both the sense that they offer maximal expected return for some given level of risk and minimal risk for some given level of expected return.

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