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Portfolios 503: Modern Portfolio Theory

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1.
Efficient portfolios achieve low volatility by _______.
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Asset allocation. Efficient portfolios achieve low volatility by diversifying.
2.
An efficient portfolio seeks the highest return for the________.
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Lowest volatility. The theory helps you to locate the best-performing set of assets for the lowest amount of volatility.
3.
If you invest in a portfolio at the bottom of the efficient frontier curve, the portfolio has _______.
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Low returns and low risk. The bottom of the efficient frontier involves low risk and low return.
4.
The risk of a portfolio asset being affected by market changes is called systematic risk.
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True. The risk of a portfolio asset being affected by market changes is called systematic risk.
5.
The lower the volatility of an investment, the _______ its reward.
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Lower. Safe investments do not reward their owners as well as volatile ones do.