Problem

Figure 8.11 below purports to show the range of attainable combinations of expected return...

Figure 8.11 below purports to show the range of attainable combinations of expected return and standard deviation.

a. Which diagram is incorrectly drawn and why?


b. Which is the efficient set of portfolios?


c. If rf is the rate of interest, mark with an X the optimal stock portfolio.

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Solutions For Problems in Chapter 8