# 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.

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CFA

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- 115.100.02 Portfolio Management - Reading 52 - Portfolio Risk and Return Part I to 115.100.02.06 Portfolio Management - Reading 52 - 6. Efficient Frontier