Which of the following is the most true regarding the type of assets found along the efficient frontier?
a) Exclusively portfolios consisting of several different assets.
b) Portfolios consisting of several different imperfectly correlated assets, as well as individual securities at certain points.
c) Portfolios consisting of several different perfectly correlated assets, as well as individual securities at certain points.
d) Individual securities, with some portfolios consisting of imperfectly correlated assets.
The correct answer is b.
The efficient frontier is comprised mainly of portfolios that contain several imperfectly correlated assets. In some cases, individual securities can be located on the end points of the curve.
The efficient frontier would not be mainly comprised of portfolios containing perfectly correlated assets as these portfolios are not benefiting from diversification.


  1. The Chairman of Bright Star Life and Casual had a meeting with his broker this afternoon ...

    The correct answer is b) Insider trading would include information that is material and non-public. Certainly, a poor earnings ...
  2. Which statements about common shareholder rights are FALSE? I. A shareholder may ...

    The correct answer is a. I should be the the other way around: convertible bond holders can exchange their bonds for shares. ...
  3. If ABC Company had the following Income Statement figures, what is the Operating ...

    The correct answer is c): The operating margin is a very useful test of the efficiency of corporate management. Operating ...
  4. A customer sells a 6% corporate bond on Tuesday October 4th for regular settlement ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  1. No results found.

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!