Respuesta :
The minimum variance portfolio is a dominant portfolio within about an opportunity set that carries the lowest feasible level of risk.
The correct option is B.
What Is A Minimum Variance Portfolio?
Individual, volatile stocks that are not associated with one another are held in a minimum variance portfolio. It makes no difference if one security is rising in value while another is falling. The portfolio in general is considered less risky due to its low correlation.
Is the portfolio with the lowest variance the best portfolio?
If all investments share the same expected return, minimum variance weighted portfolios are optimal, but maximum diversification weighted portfolios remain optimal if all investments are the same Sharpe ratios.
What exactly is a dominant portfolio?
Whether they contain two or more assets, dominant assets are referred to as efficient portfolios. A portfolio that is efficient is any collection or combination of assets that has the highest expected return through its risk class and/or the lowest risk at the given rate of return.
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I understand that the question you are looking for is:
A dominant portfolio within an opportunity set that has the lowest possible level of risk is referred to as the:
A. efficient frontier.
B. minimum variance portfolio.
C. upper tail of the efficient set.
D. tangency portfolio.
E. optimal covariance portfolio.
