cracking true or false question efficient, question, false

Bad5shah

Individual securities do not lie on the CML or the Markowitz efficient frontier.

true or false?

JGovender

Thats what I thought..


BUT....wont an individual security that offers the HIGHEST possible return plot on the efficient frontier?

MonkeyBusiness

hmmmm, can't give a precise answer...individual securities are inefficient "portfolios" that's the way i see it

koba

but the efficient frontier's 'end points' have to be the assets offering the lowest and highest returns...

I need to STOP!!

suyash1989

sarah, take a good hour of sleep after lunch if possible...i did it and even so i continue to feel very near to burn out mode...not a good prosect for tomorrow...

ajpheif16

Individual securities do not plot on the CML, entire portfolios plot on the CML. The same applies for the efficient frontier. The CML is a straight line because you can lend and borrow to create an optimal portfolio whereas you cannot on the efficient frontier.



Edited 1 time(s). Last edit at Friday, June 5, 2009 at 10:51AM by Chuckrox8.