Figure below purports to show the range of attainable combinations of expected return and standard deviation. a.

Question:

Figure below purports to show the range of attainable combinations of and standard deviation.

a. Which diagram is incorrectly drawn and why?
b. Which is the efficient set of portfolios?
c. If r f is the rate of interest, mark with an X the optimal stockportfolio.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...