CHAPTER 21 QUIZ 41 TO 45

CHAPTER  21  QUIZ  41 TO 45
41. The efficient frontier
A. Represents all possible portfolios for a given level of risk
B. Separates unattainable portfolios from less than optimal portfolios
C. Is different for every investor
D. More than one of the above
42. Under Markowitz' theory, the ideal portfolio for an investor is represented by
A. The point of tangency between the efficient frontier and the investor's indifference curve
B. The highest possible indifference curve
C. The highest possible point on the efficient frontier
D. None of the above
43. The capital market line (CML) as defined by the capital asset pricing model is characterized by all of the following except
A. A straight line tangent to the efficient frontier
B. A straight line which includes the rate of return on a risk free asset
C. A point on the efficient frontier above which higher returns can be generated by borrowing funds without assuming more risk
D. All of the above are characteristics of the capital market line
44. The point of tangency between the efficient frontier and the capital market line
A. Is the ideal portfolio of available investments
B. Can be calculated by using the Markowitz portfolio theory and CAPM
C. Represents the point at which the market is in equilibrium
D. All of the above
45. The capital market line can be used to determine the expected return on any portfolio based on
A. Unsystematic risk
B. The degree of risk on that portfolio
C. The market rate of return
D. None of the above