The enclosed area in Figure 8.16 shows all the possible portfolios obtained by combining the given securities in different proportions (that is, the opportunity set).
a. Which of the portfolios (A, B, C, D, E, or F) is (are) on the efficient frontier?
b. If an investor is interested in maximizing expected returns, which portfolio should be chosen?
c. If an investor is interested in minimizing risk (as measured by standard deviation), which portfolio should be chosen?
Reference: Figure 8.16:
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