Folder:

115 CFA

File:

115.100.02.06 Portfolio Management - Reading 52 - 6. Efficient Frontier

# 6. Efficient Frontier

## g. describe and interpret the minimum-variance and efficient frontiers of risky assets and the global minimum-variance portfolio;

What is the mean-variance portfolio theory?

Any investor will choose the optimal portfolio from the set of portfolios that:

- Maximize expected return for a given level of risk; and

- Minimize risks for a given level of expected returns.

What is the minimum-variance frontier?

The minimum-variance frontier shows the minimum variance that can be achieved for a given level of expected return.

What is the efficient frontier?

The efficient frontier is the set of mean-variance combinations from the minimum-variance frontier where, for a given risk, no other portfolio offers a higher expected return.

##### Source:

- CFA