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    Markowitz Efficient Frontier

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    Markowitz Efficient Frontier - the graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk. Any portfolios above the frontier cannot be achieved. Any below the frontier are dominated by Markowitz efficient portfolios.

    Which one of the following portfolios cannot lie on the efficient frontier as described by Markowitz? (Markowitz Portfolio Selection Model) Explain.

    Portfolio Expected Return (%) Standard Deviation (%)
    a. W 15 36
    b. X 12 15
    c. Y 5 7
    d. Z 9 21

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    Solution Preview

    If we plot the expected return against the standard deviation, we see that portfolio Z is a dominated portfolio. Portfolio X has a ...

    Solution Summary

    The solution answers which portfolio is not on Markowitz Efficient Frontier, given expected return and standard deviation of return.