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1.
Efficient portfolios achieve low volatility by _______.
Asset allocation. Efficient portfolios achieve low volatility by diversifying.
2.
The lower the volatility of an investment, the _______ its reward.
Lower. Safe investments do not reward their owners as well as volatile ones do.
3.
If you invest in a portfolio at the bottom of the efficient frontier curve, the portfolio has _______.
Low returns and low risk. The bottom of the efficient frontier involves low risk and low return.
4.
Modern Portfolio Theory is based on the assumption that _______.
Investors dislike risk. Modern Portfolio Theory is based on the assumption that investors dislike risk but want the highest return for low levels of risk.
5.
An efficient portfolio seeks the highest return for the________.
Lowest volatility. The theory helps you to locate the best-performing set of assets for the lowest amount of volatility.
